Labour shortage would delay revival for realtors post lockdown

NEW DELHI:  The nationwide lockdown imposed to rein in coronavirus has dealt a big blow to the country’s realty sector, which has already been reeling under a demand slowdown and pending construction works.

According to Anuj Puri, chairman of ANAROCK Property Consultants, even if the lockdown is partially lifted, it would take some time before the developers could resume construction work in full swing, as most of their labourers have left for their hometowns. 

“Many may opt to stay back in their villages longer, fearing the pandemic. This will lead to shortage of labour and further project delays,” said Puri. This will be the first challenge, he said. According to ANAROCK research, as many as 156.2 million housing units are currently under construction across top seven cities in India. Of this, nearly 46.6 million units were to be delivered in 2020.

The realty sector is among the top employers in the country, and construction has been halted since March 24.Another challenge will be of cash flow and low demand.

“A prolonged outbreak may result in recessionary dynamics, which would have a deeper impact on project cash flows and execution abilities. Such an impact, combined with the ongoing credit squeeze and existing inventory overhang in the sector, would likely result in significant credit pressures going forward,” said Mahi Agarwal, assistant vice-president and associate head at ICRA.

And sales are unlikely to recover in next few quarters. “Housing sales in the first quarter of 2020 plunged by 42 per cent over the corresponding period in 2019,” said Puri, adding that people will keep on defering big ticket purchase as uncertain, job loss will loom largely for next few months.