Friday, March 29, 2024
HomeNewsReal EstateOverall sales volume for real estate inventory to dip by 40-60%: ICRA

Overall sales volume for real estate inventory to dip by 40-60%: ICRA

For the current year, ICRA expects overall sales volume from completed and under-construction inventory to reduce by 40-60% on account of Covid-19. The preference for completed inventory is expected to continue thus favouring the developers having higher proportion of such projects

It also expects the spend on ongoing projects to reduce by around 30% in FY21 on account of the pandemic. Project execution has also gotten hampered, with reduced labour force presence and raw material supply chain disruptions attributable to continuing localized lock-downs on non-essential services.

New launches, which were already on a declining trend given the increased focus on deliveries, are likely to get further deferred.

In FY21, ICRA expects collections from customers to decline by around 35-40%. Committed receivables from already booked sales have also been impacted, given that some mile-stone based payments have been deferred due to stoppage of construction activities earlier. Projects catering to the self-funded segment have witnessed a more significant disruption in collections as compared to the home loan funded segment, as banks continue to make payments to developers.

In some cases, pay cuts/job-losses have led to re-evaluation of buyer credit profile by HFCs, thus impacting incremental disbursements. However, the steep reduction in home loan rates may aid housing demand to some extent, with home loan interest rates having dropped below 8% for the first time in 15 years, the company said.

Overall project cash flows are expected to be impacted by slower collections leading to reduced inflows. Many companies have availed moratorium to bring down debt repayments, which coupled with automatic reduction in collection-linked prepayments, has provided some relief to the developers.

The office leasing segment has witnessed lower impact due to Covid-19 pandemic so far. Over the last six months, fresh leasing transactions have reduced significantly due to the operational challenges posed by Covid-19 as well as cautious approach adopted by corporates towards office expansion / consolidation plans, ICRA said.

Moreover, there could be considerable reduction in the supply pipeline due to moderation in demand over the medium term and constraints on availability of financing.

Sourceetrealty
RELATED ARTICLES

Most Popular

Hot News

Customer Satisfaction Survey Template
Please help us improve our products/services by completing this questionnaire.

Would you recommend this company to a friend or colleague?

Clear selection

Overall, how satisfied or dissatisfied are you with our company?

Clear selection
Part 2/4: Service/Product Assessment

Which of the following words would you use to describe our products/services? Select all that apply.

Clear selection

How would you rate the quality of the website? (from 1 to 10)*

Clear selection
Part 3/4:Customer Care

How responsive have we been to your questions or concerns about our products/services?

Clear selection

At what email address would you like to be contacted?

Clear selection
Part 4/4: Additional Feedback

Do you have any other comments, questions, or concerns?

Clear selection