Residential bookings in Mumbai region fall 78% in Feb-mar: Report
Residential bookings witnessed a 78 per cent fall in the Mumbai Metropolitan Region between February and March as compared to January this year, owing to the adverse impact of the coronavirus outbreak on the real estate sector, says a report.
According to a report by real estate developers’ association Credai-mchi, as compared to January 2020, bookings of residential units have fallen by 78 per cent in 30 days from February 2020 last week to March third week.
The report, which has been conducted with insights from over 100 Mumbai Metropolitan Region (MMR) developer members to ascertain impact of Covid–19 on MMR Real Estate, further said there has been a 250 per cent drop in home loan collection in March as compared to January this year.
“Residential real estate has already been under an enormous pressure due to the prevailing liquidity crunch, subdued demand and unaffordable prices. Due to Covid-19 and the subsequent lockdown, the Indian real estate industry, along with its allied industries, are experiencing a substantial slowdown in activities,” Credai-mchi President Nayan Shah said.
The report noted that RBI'S three month moratorium on term loan instalments is expected to release some pressure off the developers.
“Developer cashflows will be adversely affected due to the lockdown. While cash outflows in the short term will be negated due to stalled construction projects, the overall moderation in the long term will depend upon developer's ability to sustain collections,” it said.
Due to the lockdown, all construction activities across the country have come to a standstill.
“Stalled projects will decrease the demand for construction finance and increase liabilities on bank, hence the cost of finance is expected to increase,” the report added.
Meanwhile, Maharashtra real estate regulator MAHARERA has allowed three months extension to all registered projects where completion date, revised completion date or extended completion date expires on or after March 15, 2020.
The report further stated that pre-commitments will form a significant part of leasing of commercial office spaces in the first half of 2020.
“Other than pre-commitments, demand for office is likely to be postponed to H2 2020 or H1 2021. Existing tenants might delay lease renewals to H2 2020 and will renegotiate rent free periods until lockdown,” it said.