Realty Players Fear Pay Cuts, Job Losses As Lockdown Hits Revenue
Pedestrian wearing protective masks walk along a sidewalk in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Realty Players Fear Pay Cuts, Job Losses As Lockdown Hits Revenue

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Real estate sector, which is estimated to incur a loss of over Rs 1 lakh crore due to nationwide lockdown, is likely to see pay cuts and job losses as cash-strapped builders will look to reduce their fixed cost at a time when their sales revenue has almost come to a grinding halt, according to industry players.

However, property developers and consultants believe that damage could be minimised if the government announces a big relief package for the industry as well as the overall economy.

"Real sector is the second-largest employer after agriculture and provides for both blue and white collar jobs. Construction and other allied workers comprise a very important segment of the Realty Sector. There might be job losses and pay cuts," CREDAI National Chairman Jaxay Shah said. As of now, he said, the priority is to provide labourers with basic amenities. "It's too soon to say anything on pay cuts as this will totally depend on how long the pandemic continues," Shah said.

NAREDCO President Niranjan Hiranandani said: "There will be an obvious impact on sales, and that in turn will impact profitability of business organizations. So, a pay cut might be the first reaction across business organizations, some jobs being lost might be the second." He said revenues of developers, which had already been facing liquidity crunch, would be badly hit, resulting in defaults in repayment of debts. "If outstanding payments get defaulted on, and the numbers keep rising, companies may go bankrupt, this in turn will directly impact jobs. Before the Covid-19 pandemic, job losses were around 15 percent of the total workforce, this may increase to 25 percent," Hiranandani said. However, he said if the government soon announces a stimulus package, "Things may not end up being so bad, in terms of companies going bankrupt or jobs being lost."

Puravankara Ltd. MD Ashish Puravankara said, "While the listed players, like us, who are geographically de-risked and have diverse business portfolio, will be able to plan and organise the next steps; the current impasse may pose a problem in the long term for a few companies who might have to take some austerity measures in the shape of job losses or pay cuts."

Home-grown property consultant Anarock Chairman Anuj Puri said there could be pay cuts and job loss if lockdown continues for a longer period. "If the lock down was to open in the next 1-2 weeks then we may not see as many job losses or pay cuts," he said.

Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa, CBRE, said: The Covid-19 situation is still evolving in India and it is too soon to comment on the impact it will have on the industry."

Ramesh Nair, CEO & Country Head, JLL India, said the company has taken many cost management actions to protect its employees and continue to serve clients. "JLL has a strong balance sheet and JLL's businesses in India and beyond are positioned to emerge with resilience from the challenges of the Covid-19 pandemic. To help ensure our company can continue to protect our people and serve our clients and shareholders now and when the economic and business environment improves, our leaders have agreed to take several prudent cost management actions," he said. This discipline would help the company to support its staff and clients across India through this challenging time and be ready for future opportunities, Nair said.

Mani Rangarajan, Group COO, Housing.com, Makaan.com and Proptiger.com, said job losses and pay cuts in the sector will remain limited. He expects real estate to gain renewed interest from both end users as well as investors because of sharp correction in other investment tools like the equity market.

Manoj Gaur, MD, Gaurs Group, said the company has been performing well in terms of sales from the last 3-4 years and disruption of a few months will not have any major impact on financial strength of the company.

Nayan Raheja, Executive Director, Raheja Developers said: "We are waiting and watching on the current situation and how long the lockdown continues to take any definitive call on this matter. However, at the moment all labour and staff are being supported." He demanded that the government should restructure existing loans of the builders.

Ashok Gupta, CMD, Ajnara India, said, "These are tough times, but we are standing strongly with our employees amid this crisis."

NCR-based KW group Director Pankaj Jain said: "As of now we are not deducting salaries of our employees. In the current situation, we all need to support each other. Companies must show more empathy towards their staff."

Akshay Taneja, MD, TDI Infratech, said, "It is too early to take a call."

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