To recover
In its report titled ‘India Hotels Outlook: Impact of COVID-19’, HVS ANAROCK expects secondary and tertiary markets to hold up better than gateway and metro markets, which are expected to witness short-term volatility.
As of May 2020, supply was forecast to increase at a CAGR of 2.8 per cent during the 2020-2024 period. Given the recent events, supply growth is now expected to be lower, and at a slower pace, than previously anticipated.
The report states that some properties are likely to be repurposed to other asset classes such as hospitals, student housing, and co-living spaces.
• Under-construction projects may face delays on account of labour shortages and issues pertaining to vendors and supply chain.
• Muted market likely lead to some projects pending recovery.
• Financing challenges on account of negative sentiment for the sector is likely to delay projects.
• Changes in market conditions may render proposed projects infeasible; as a result, some projects may be postponed or cancelled.
• Some properties may close on account of financial stress and not reopen for an extended period of time, resulting in negative supply growth.
conditions will delayed openings; may be on hold
• Secondary and tertiary markets are expected to hold up better. Gateway and the top 10 metro markets will witness short-term volatility.
• Supply growth is expected to slow significantly, as new or under constructions projects are delayed or abandoned and several highly leveraged assets are shutdown.
• The pace of immediate demand growth is co-related to the level of stimulus infused by the govt, besides the availability of a cure and vaccine.
• The transaction market will witness high activity due to likely softening in values and increased availability of stressed assets.