2nd Covid wave sweeps away homebuyers’ purchase plans
- Also, about 95% of developers expect inevitable delays in projects due to labour shortages and delays in securing approvals.
The second wave of the pandemic is threatening to put brakes on a nascent recovery of India’s real estate sector as the prevailing uncertainty leads potential buyers to defer their purchasing plans while developers battle issues such as liquidity constraints and higher construction costs.
Nearly 98% of developers see fewer enquiries, and about 95% of customers are holding on to their purchases, according to a survey by the Confederation of Real Estate Developers’ Associations of India (Credai) issued on Thursday.
Also, about 95% of developers expect inevitable delays in projects due to labour shortages and delays in securing approvals.
Credai surveyed 4,813 developers across north, east, west and south India between May 24 and June 3 to assess the impact of the second wave on the real estate sector. The survey showed a change in consumer behaviour resulting in a slowing of demand.
“The real estate sector showed tremendous resilience in bouncing back on a cautious recovery path post the first wave, despite few relief measures. However, the second wave has prompted us to reflect and re-evaluate the growth path of the industry. The findings show the second wave has had a more debilitating impact on the real estate sector than the first wave,” said Harsh Vardhan Patodia, national president of Credai.
The resurgence of infections and strict lockdowns by most states took a toll on both sales and launches of new residential properties during April and May in the top markets, halting a gradual recovery witnessed until March from the turmoil caused by the first wave last year.
Residential sales plunged 60% in April from the preceding month. Fresh project launches during the month dropped 53% from March, remaining subdued for the fifth straight month, according to a May report by Edelweiss Research.
To add to developers’ woes, the rise in prices of construction materials such as steel and cement contributed to a more than 10% jump in construction costs for most developers. Various financial constraints and liquidity crunch have also added to woes. Most developers are experiencing issues in servicing of loans, disruptions in planned collections and in disbursements of customer home loans, Credai said.