Residential Real Estate Bookings Tumble 78% In February-March In Mumbai Region 

Home bookings tumbled 78 percent in February-March over January in the Mumbai Metropolitan Region, a developers’ survey found, indicating how the virus-driven lockdown has wiped out demand for the sector.

Walk-ins dropped 80 percent month-on-month in 30 days through the third week of March, according to the survey of 103 builders conducted by CREDAI-MCHI, the Maharashtra unit of the national developers lobby.

“Indian real estate sector is currently in a survival mode,” said Nayan Shah, president, CREDAI-MCHI. “Due to Covid-19 and the subsequent lockdown, the Indian real estate industry, along with allied industries, is experiencing a substantial slowdown in activity.”

The virtual freeze in Mumbai, the second-largest and the costliest real estate market in India, only shows how the new coronavirus disruption has further crippled the sector already battling a liquidity crunch, subdued demand and an inventory pile-up. According to Anarock Research, the Mumbai region has an under-construction stock at 4.65 lakh units.

The survey also found that collections for under-construction apartments have seen a sharp drop. Homebuyers have not authorised disbursements, it said.

To be sure, the work has come to a standstill during the lockdown and disbursements are linked to the stages of construction. While the survey was conducted between the last week February and third week of March, before the national lockdown and central bank allowed moratorium on loans, Maharashtra had already announced shutdowns by then.

The residential real estate sector is not the only segment suffering. According to the survey, commercial tenants may delay lease renewals and seek rent-free period during the lockdown.

Here are the key findings of the survey:

Residential

• Residential bookings have fallen 78 percent (from February last week to March third week) compared with January 2020.
• Sharp drop in home loan collections in March compared with January.
• Total walk-ins dropped almost 80 percent in 30 days.
• 7,766 confirmed scheduled site visits were cancelled due to Covid–19 during the period of the study.
• Cancellations rose 200 percent in the third of the study, the trend normalised to average figures in the last week.

Commercial

• Pre-commitments will form a significant part of leasing in first half of 2020.
• Existing tenants might delay lease renewals to second half of 2020 and will renegotiate rent free periods until lockdown.
• Construction of office space to be delayed due to disruption in the supply chain of vendors.
• Co-working spaces could face long-term impact. Seat-based short-term leases might see a fall due to a surge in ‘work from home’ productivity during the lockdown.

Industrial

• The nationwide lockdown will adversely impact the operations of industries and immediate investments in industrial properties.
• The overall impact on the industrial assets will be low and recovery will be relatively faster than other real estate asset classes.

Investments

• Due to the higher yields and stability in Indian office market, investments will remain stable except for the short-term hiccups.
• With Embassy REIT giving almost 48 percent return until the market crashed in the first week of March, India will witness an increase in investments as investors are still bullish about the office assets in the long term.