Layoffs in IT firms will hurt the realty sector, say experts in Mumbai
Mumbai city news: IT professionals form an important chunk of homebuyersmumbai Updated: May 28, 2017 23:39 IST
Realty experts said that recent layoffs in the Information Technology (IT) companies could hit the sector, which was slowly showing signs of revival.
IT professionals form an important chunk of homebuyers. This is particularly seen in places like Navi Mumbai and Pune in Maharashtra, apart from Bengaluru, Hyderabad and Noida. IT companies drive both the residential and commercial real estate markets.
According to Jones Lang LaSalle (JLL) India, a realty consultancy firm, the revival of the real estate sector could take time if the scenario continued. “If the current job scenario continues for long, it could quite possibly have a negative impact on residential demand, especially in the mid-premium segment,” said Shubhranshu Pani, managing director, Strategic Consulting, JLL India.
According to industry body estimates, the Indian IT and BPO sectors employ close to four million people in 16,000 companies. With things improving slowly in the construction sector, many of these IT professionals were expected to purchase homes in the coming months. However, the retrenchments seem to have spoiled the party. There is fear that even people who have jobs may choose to skip butying homes as of now because of the insecurity in the IT sector.
The real estate sector has been in a recession in the past few years . The reason — exorbitant realty prices and stringent home loan conditions coupled with high interest rates. Demonitisation also added to the chaos and resulted in a paralysis of the realty sector for some time. However now, the condition is improving as builders are offering discounts and the banks are coming up with subsidised interest rates.
According to MCHI-CREDAI, a leading association of builders, jobs cuts were bad news for the realty sector. “This will prolong the slowdown. It will also affect the commercial realty market also,” said Manohar Shroff, vice-president, MCHI-CREDAI (Navi Mumbai). He said IT professionals make up at least 30 % of the buyers in the Navi Mumbai realty market.