Coronavirus Dents Hope Of Recovery In Maharashtra’s Property Market This Gudi Padwa

Property sales have fallen in Maharashtra, home to two of India’s largest realty markets, ahead of the Gudi Padwa festival as fears over the outbreak of the novel coronavirus dampened sentiment.

The Maharashtrian new year, which falls on March 25, is crucial for the real estate sector when it’s considered auspicious to buy property, with developers even launching newer projects to coincide with it. But with the maximum number of people testing positive for the virus originating in Maharashtra, the Uddhav Thackeray-led state government has ordered the closure of public centres like malls and multiplexes and imposed curbs on public transport. That has dented developers’ hopes of a market revival—who are deferring launches or making fewer offers after seeing a reduced number of site visits.

Maharashtra, in its recent budget, announced a 1 percent reduction in stamp duty in certain key markets of the state to aid property sales. Still, Anarock Property Consultants expects this year’s Gudi Padwa to witness the worst decline in housing sales and new launches. “As Maharashtra is the worst-affected state, the usual festival fervour for the real estate will remain muted.”

Things aren’t too different in the rest of the country as well. Early data trends by Anarock Research, the consultant’s research arm, shows that housing sales and new launches have more than halved across the top eight property markets in India—of which Mumbai, the second-largest, and Pune are in Maharashtra—so far in March over the previous month. “Most developers have deferred their new launches for an unknown period in anticipation of increased skittishness on account of the virus,” Anuj Puri, chairman of Anarock Property Consultants, told BloombergQuint.

“Multiple social distancing advisories issued by the state government will inevitably reduce site visits, which are de rigueur for making firm purchase decisions,” Puri said. “Developers will carefully monitor the situation and its overall economic fallout on their business and their financial health as the liquidity squeeze could increase.”

The coronavirus disruption is the latest in the series of setbacks for India’s developers, starting with Prime Minister Narendra Modi’s decision to outlaw 86 percent of currency overnight in November 2016. The stricter housing law aimed at protecting homebuyers hurt working capital cycles and even as the real estate sector was recovering from it, the surprise defaults by IL&FS Group triggered a credit crunch.

Now with the virus again hurting hopes of a revival, Mumbai-headquartered Ajmera Group isn’t rolling out festive offers. “For the last two days we have seen that site visits and sales have gone down drastically as people have been following government advisories and are staying back at home,” Dhaval Ajmera, director of the company, told BloombergQuint. “Most of the people have gone into a pause mode. We request the government for its intervention to bring back momentum in the sector.”

Mumbai-based Terraform Realty is cancelling its plans to introduce special festive offers and is even giving relaxation in payment schedules to its existing clients following requests from them. “This year, we had a lot of hopes for the Gudi Padwa season but with the outbreak of Coronavirus, walk-ins, as well as sales, have gone down by 75 percent from the previous week,” said Arvind Sharma, manager-sales of the company. “We have no choice but to give our existing clients relaxation in payment.”

Sandeep Sadh, a real estate agent based in Mumbai and founder of mumbaipropertyexchange.com, said that buying a house is not on anybody’s priority list. “On our website, traffic has fallen by 40 percent compared to last week. This festive season anyway had lost its power to attract people over the last five years,” he said. “This year, there are hardly any inquires or interest from buyers and even from developers’ side the offers aren’t confidence-inspiring.”

Changing mindsets among the millennials is another reason for the situation, apart from the coronavirus scare. “For them, the right time to buy isn’t based on any specific festivity but when they have money and they’re sure about the investment”.

Prajapati Constructions, a Navi Mumbai developer, haven’t seen any reduction in site visits or enquires but it’s apprehensive that if things don’t improve by the weekend, there will be a significant drop. “As the actual deals will be locked on the day of Gudi Padwa, there’s still a lot of uncertainty on how the situation will be then,” said Rajesh Prajapati, managing director of Prajapati Constructions.

Depending on how the situation unfolds, Puri of Anarock said, construction activity will take a hit if the situation goes beyond control.