Indians are getting a sense of deja vu as the second wave of covid-19 grips the country. It’s been more than a year since PM Modi addressed the nation seeking a janta curfew, to stop the spread of novel coronavirus. One year thereafter, the novel virus isn’t novel anymore with many getting infected. The pandemic has halted daily life and taken a massive toll on the healthcare system. Just when everyone assumed that the days of lockdowns and restrictions were over, the virus reared it’s ugly head and striked harder. The second wave is proving deadlier than the first, taking the younger population under its stranglehold.
The real estate sector has firmly been in the grip of the virus, with multiple problems facing the industry. Properties are seeing delay in rent collection as unemployment rates surge. Businesses and retail outlets aren’t noticing enough footfalls to cover their costs. Hotels, gyms and malls are all struggling. Additionally, with migrant labourers in the fear of being jobless and homeless have decided to visit their hometown which will lead to a delay in project completion.
The pandemic will have many adverse effects on the real estate sector due to the arrival of second wave:-
Disruption
Right when the real estate sector thought that normal life was back, it got subjected to disruption once again. The second wave is set to extract a fresh toll on the real estate market by way of labour shortage, delayed rent receipt and higher bankruptcies. A lot of industries are getting back to square one as restrictions are reimposed but nothing beats the extent of damage which the real estate sector faces. A fresh wave of loan defaults and a surge in NPAs is likely.
No government interventions
Generous stamp duty cuts by several State Governments had aided a fresh surge in real estate activities, especially during the Jan-Mar quarter of FY 2020-21. With the fiscal deficit of the Union Government and State government going through the roof, the real estate sector doesn’t expect major policy interventions this time around. The sector saw exhilarating activity and high sales on the back of Government relief in the first wave which it may not see during the current wave.
More project delays
The real estate sector with the second wave will see fresh rounds of project delays and a lot of under-construction properties would come under the ambit of RERA violations. With Covid-19 wrecking havoc on project completion for the second time, the real estate sector will find itself in an appalling state of affairs.
Loan repayment delays
With Delhi following Maharashtra’s example and imposing lockdown, India is all-set for a prolonged period of State-led lockdowns in various parts of the country. The resultant losses may increase the likelihood of defaults in loan repayment.
India is among the handful of major economies which is expected to grow in the upcoming fiscal. After successfully warding off the first wave of the virus, the real estate sector is hopeful that the second wave would be dealt with successfully as well. Importantly the existence of vaccine and the speed at which the population is inoculated is likely to ensure that the second wave is the last one. Real estate sector is hopeful that the Union government, State governments, healthcare workers and vaccine makers will rise up to the occasion and put the pandemic behind us.
