Repo rate reduction by RBI

To help homebuyers combat the liquidity crisis triggered by the COVID-19 induced lockdown, the Reserve Bank of India (RBI) slashed repo rate by 75 basis points in March. This was accompanied by an optional extension of home loan and other EMIs by three months. Earlier in the quarter, major banks, including the State Bank of India, Bank of India, Canara Bank, ICICI Bank and Bank of Maharashtra slashed the Marginal Cost of Funds based Lending Rate (MCLR) by 5-25 basis points. The move had a direct positive bearing on the equated monthly instalments of home loan borrowers.

Infrastructure gets a shot in the arm

The Union Budget 2020-21 was a mixed bag for the realty segment. However, Central Government’s decision to invest Rs 100 lakh crore towards infrastructure development in the next five years gave a fresh lease of life to the construction industry. Further, the Railways Board of India, too, announced its plans to develop high-speed and semi-high speed rail corridors across six routes, spanning across major metro cities.

Supply chain and sales disrupt amid COVID-19

The outbreak of COVID-19 in India resulted in a nationwide lockdown, halting site visits and property sales by over 70 percent. Most new project launches planned for March and April have been deferred at least until the next festive season in September. With construction activities stalling almost immediately, the completion of projects got further delayed by at least three months.

SEBI relaxes compliance for REITs, InvITs

Post the outbreak of Coronavirus, the Securities and Exchange Board of India (SEBI) approved temporary relaxation of one-month on half-yearly compliance certificate on share transfer and relaxation of three weeks on the quarterly statement of investor complaints for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).


Office space leasing across top eight metro cities grew by 27 percent, YoY. The Information Technology, BFSI and the co-working segments remained the biggest occupiers.

Bangalore, followed by Hyderabad, Delhi NCR and Mumbai accounted for 75 percent of the total office space uptake.

The Reserve Bank of India’s (RBI) decision to push the Date of Commencement of Commercial Operations (DCCO) of project loans for commercial real estate to March 2021 is expected to auger well for the developers.

The Coronavirus pandemic deferred any possibilities of the launch of Real Estate Investment Trusts (REITs) to the next year. The recent proposal to shift the Dividend Distribution Tax (DDT) from the company level to individual investors in the Union Budget 2020 also posed as a barrier towards the launch of REITs.



The Jan-Mar 2020 quarter witnessed the housing industry on a revival mode with both enquiries and sales volume growing, albeit moderately versus the previous few quarters. The month of March, however, unfolded unexpectedly with the outbreak of COVID-19. The situation brought property site visits and construction activities of over 15 lakh units to a temporary halt across metro cities. The much-awaited festive period, wherein discounts and freebies could have uplifted sales volumes, did not benefit the housing industry this year, due to social distancing norms eventually followed by a nationwide lockdown.

Developers have been forced to defer the launch of any new projects until the virus gets contained. After an initial launch of around 650 projects across metros, new launches dipped on account of reduced cash flows from existing buyers and shortage of construction material amid shrinking imports from China. While Delhi NCR and Kolkata reported a 6-20 percent dip in new project additions, QoQ, Ahmedabad and Hyderabad showcased the maximum drop of 30-40 percent, YoY.

In terms of price movement, Hyderabad, Bangalore and Ahmedabad were the only metros to see a quarterly uptick in capital ‘asks’, albeit by a marginal one percent, each. The rental rates inched up by a meagre 2-4 percent, YoY, with Pune taking the lead. The next quarter is expected to continue reeling under the remnants of the health crisis as sales are expected to be low-key.



Demand for ready homes kept the market afloat in the first quarter of the year until the global crisis in the form of coronavirus struck India. Come March 2020; property transactions came to a sudden halt as homebuyers effectively followed the nationwide lockdown. In the first two weeks of March, property enquiries dipped by over 20 percent in northern metros and by 7-8 percent in southern metros. Eventually, new project launches were deferred indefinitely and deal closures reduced to almost zero. Owners, too, exited the market due to uncertainties looming the opening up of markets and life getting back to normalcy.

The shutdown of construction activities posed a larger threat to the financial health of the developers, who were yet to overcome from the Non-Banking Financial Companies (NBFC) crisis. The timely completion of residential projects is also doubtful now. Of the 15 lakh under-construction units across the top eight metro cities in India, Mumbai Metropolitan Region (MMR) holds 57 percent of the inventory, i.e. 8.90 lakh units, followed by Delhi NCR with 27 percent or 4.25 lakh units, which have been stalled.

Property rates across metro cities remained stable this quarter with Hyderabad, Bangalore and Ahmedabad reporting a marginal one percent uptick in the capital ‘asks’, and the rest maintaining status quo, QoQ. The pandemic, however, may trigger price correction in short to mid-term.

Government’s thrust on affordable housing remained evident, despite many metros reporting an oversupply of homes priced under Rs 40 lakh against its demand. Of the 6.24 lakh unsold units across the top eight metro cities, about 36 percent fall under the affordable housing bracket. Slow-paced offtake of homes under Pradhan Mantri Awas Yojana (PMAY) and compromised amenities in such projects may make matters worse in the times to come. As of now, Uttar Pradesh, Gujarat and Andhra Pradesh lead all States in the development of lowcost homes across the country.


Much like other industries, Indian real estate sector was also at the receiving end of the nationwide lockdown following the COVID-19 outbreak. Housing demand, enquiries and sales volume, which posted growth in the first two months of Jan-Mar 2020, slowed down in March. The industry now heavily relies on governmental intervention to support its functioning and aid its revival. Measures including tax exemptions, deferring of tax payments, extension in the yearly financial closing date, and relaxation policies will act as growth stimulators for the industry in mid-to-long term. With RBI cutting down the repo rate by 75 basis points and allowing three months’ extension in the payment of home loan EMIs, buyer sentiment will strengthen in the subsequent quarters. The silver lining is the gradually shrinking unsold inventory of 6.24 lakh units, which may further reduce in the absence of any new launches, once the market returns to normalcy.