Impact on Indian Housing Market due to COVID-19

Corona virus proliferation has further delayed a recovery that may be due to measures launched to revive various government demands, however, it does not appear that prices will fall immediately. Niranjan Hiranandani, national president, NAREDCO, says that "reviving Indian realty is the second largest employment generator, not only from the point of view of GDP growth, but also for job creation as the multiplier effect of more than 250 affiliated industries in the region is.

Recently, the Center announced more tax breaks and lower interest rates on home loans to make purchases more attractive, besides setting up Rs 25,000 crore stress fund for speculation.

He called for a slowdown in the residential segment, which has already stalled housing sales, project launches and price increases in India's residential realty sector, which is under pressure due to mega regulatory changes due to Real Estate Regulatory Authority (RERA), Goods and Services Tax (GST), Demonetization and Benami Property Law.

According to rating agency ICRA, the epidemic, if not soon included, will not only significantly affect the economy, but will adversely affect the cash flow and project delivery capabilities of developers.

"Although in the case of a prolonged outbreak, the impact on overall economic activity is likely to be deeper and more sustained, resulting in a more significant impact on developer cash flow and project execution capabilities, leading to a wider credit negative impact." ICRA said in a recent note that the three-month deferment announced by the RBI on loan on March 28 would provide some comfort to the builders.

“The injected liquidity of Rs 3.74 lakh crore (by RBI) with a three-month moratorium on all loans by financial institutions will ease short-term liquidity concerns and help developers as well as homebuyers. It is a great relief for developers and buyers to help ease the challenges they currently face,” says Ramesh Nair, CEO and Country Head of JLL India.

Anticipating the delay in completion of the project and supporting the builder community, the Real Estate Regulatory Authority in Maharashtra has announced a 3-month extension in the completion deadline of the project.

Recall here that real estate developers in Mumbai, the state capital and India's financial nerve center, have the largest selling stock in the top nine markets.

“Due to the 21-day lockdown outbreak of COVID-19, both manufacturing and sales activity has come to a complete halt in the entire real estate sector. At many sites, construction workers have also moved back to their hometowns. Even after the lockdown, the activity will only recommend slowly, which will cause project delays anywhere between at least 4 to 6 months,” said Sharad Mittal, CEO and head, Motilal Oswal Real Estate Funds. Welcoming the announcement of Maharera, Mittal said that although it cannot fully compensate the sector with actual project delays that are likely to be direct, 'it is certainly a decision in the right direction, to support real estate developers and the region. Overall in this global crisis.

STAY HOME, STAY SAFE, STAY ALIVE

Corona virus outbreak 2020 - affects real estate growth in India?

Today, at the endemic of this severe corona virus, experts are busy calculating abnormal human loss worldwide. People are suffering or out of home due to the outbreak of this virus. In the meantime, the effect of the unexpected opposition to this deadly virus spreading on the global economy has been agreed.

Considering COVID - 19, the estimated loss to GDP in the world so far has been assumed to be 0.2 percent. For the grace of God, the effect is by no means limited in India. But in this scenario, it is clear that the Indian economy, which has already seen a 4.5% lower growth in the July - September quarter, will probably not remain uninhabitable due to the worldwide economic slowdown. And, the realty industry of the Indian residential market is telling a different story altogether.

COVID - 19 affects the property market in India

If the data collected from SuGanta.com is analyzed together, it is clearly visible the fall of 9 important residential markets of India by 30 percent during the time span of October to December last year. It is deteriorating for the fifth consecutive time of Q3 financial year 2019.

The trend is also the same for the launch of new projects. Since the third quarter of the last financial year, the task of starting new projects has been facing a continuous decline in the mega markets. This caused an annual decline of 44% in the October to December time period.

Despite all the government-issued schemes, including the lowest interest rate on home loans and the maximum tax exemption on purchasing any residential property in India for the first time in the history of real estate, all efforts failed to revive property demands among homebuyers are in India. He still chose to remain unaffected by all the tricks played by the stakeholders to force him to go out of his fence. For example, the government took an action to limit GST to 1% for affordable flats, which also went into the vein.

Usually, the craze of buying and selling property in India increases during the festivals of October to December, which did not happen even in 2019. And now in early 2020, there has been an outbreak of the corona virus. And, it has also probably brought the worst times in the residential property market in India. 1705732 Corona positive cases reported globally as of April 10, 2020. And, it is only growing and causing more fear around the world.

The rate of property visits has fallen surprisingly

Well, impressed by the government's plans, given how interested some consumers were in searching for property on the Internet, the Corona virus outbreak just seized them again from doing any such thing. To date, on April 10, 2020, India has reported 7600 corona positive cases. The activation of social media and news channels has succeeded in making people truly aware of COVID - 19 and everyone tries 'Stay Home Stay Safe'. People are really creating social distance by listening to the words of PM Modi. Currently, India is on a 21-day long social lockout to stop the spread of pollution. So, in such a scenario, nobody is dreaming for a site coming to buy a property in India.

Plans for project delays !!

Indian real estate is largely dependent on China, which is the source for COVID - 19 outbreaks. India needs support in matters of sourcing home furnishing essentials, construction materials, plastic to steel to electronic materials and construction equipment from China. Now, India needs to look for alternative sources as China is busy controlling the epidemic of viruses. It will shoot project delays to make sure.

Noida developers present housing society as quarantine facility

Two NCR-based developers have offered the Noida administration a deported housing society that can be used as a temporary quarantine facility.

Under the Uttar Pradesh chapter of the National Real Estate Development Council (NAREDCO-UP), realty developers Supertech and Antriksh Group have offered 500-bed facilities at two locations in Noida. Noida has the highest number of COVID-19 cases in UP.

In this regard, NAREDCO UP has sent a letter to the district administration. While Supertech has offered 400 bed space, Antriksh Group has offered 100 bed space for quarantine. In addition Supertech has dedicated a special tower for quarantine if necessary.

“Naredco UP has offered 500 bed spaces to the district administration to fight coronovirus. As the number of positive cases of COVID in the region is increasing, it is our duty to provide a place for quarantine to the district administration,”said RK Arora, president of Naredco UP and chairman of Supertech.

Supertech has offered 400 bed space in the upcountry project (Yamuna Expressway) and has reserved a tower for this reason. Other members Antriksh Group have offered 100 bed space in the Antriksh Golf view project.

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COVID-19 Impact: Extends the full timeframe of MahaRERA projects by 3 months

Mumbai: Maharashtra Real Estate Regulatory Authority (MahaRERA) has extended the validity of registration of projects for which completion date, revised completion date and extended completion date is expiring on or after March 15, 2020.

With this, realty developers will get a three-month extension to complete their projects. Developers are asking for time to complete the project and the exemption from penalty fees can be extended for up to one year.

The authority has extended the date after considering the government declared Covid-19 pandemic, lockdown, its impact on material procurement and construction stagnation.

It has also extended the deadline for all statutory compliance as per the Real Estate (Regulation and Development) Act, 2016 which were in force from March, April and May to June 30, 2020.

Since mid-March, the Maharashtra government has announced a controlled lockdown as a precaution in a way that a partial workforce has been able to participate in work and construction sites in the state.

From 24 March, a complete lockdown was declared for 21 days across the country, allowing only the operation of essential services. In view of these partial lockdowns and recently completed lockdowns, construction work has been affected in MahaRERA registered projects.

“Due to the aforesaid lockdown, the supply chain to obtain construction material was disrupted and the labor force moved back to their home states. Due to these circumstances, real estate projects across Maharashtra will take some time to resume work,” the authority said in a statement.

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India 2020 Statutory Liquidity Ratio (SLR)

What is the Statutory Liquidity Ratio (SLR)?

The SLR stipulates that the ratio of appropriate securities should be maintained in relation to their demand and time liabilities (DTL) as directed by the central bank

Current SLR rate

The current Statutory Liquidity Ratio (SLR) is 19.00%. It was last revised on April 13, 2019, when it was reduced by 0.25% from its previous level of 19.25%. To date, i.e. on February 11, 2020, the policy rates will also include the reverse repo rate of 5.15%. Repo rate is 5.40%, Bank rate 5.65% and Marginal Standing Facility (MSF) rate has come down to 5.65%. According to data on key monetary policy rates and reserve requirements set by the Reserve Bank of India, the Reserve Ratio, which also includes the Cash Reserve Ratio (CRR), reached 4.00% and the Statutory Liquidity Ratio (SLR) at 19.00%.

The main objectives of SLR are:-

•     SLR (Statutory Liquidity Ratio) is one such medium that acts to the RBI to ensure the security of a commercial bank.
•    SLR helps in regulating the development of bank credit. By modifying SLR rates, the RBI can reduce or increase bank loan growth.
•     Through SLR, the Central Bank implements commercial banks to fund government securities.
•    SLR (like CRR) is a means of monetary policy to regulate and control the money supply in an economy. Low SLR rates provide liquidity in the system, as banks want to bear many government bonds and vice versa.

Statutory Liquidity Ratio (SLR) in India

The statutory liquidity ratio is directed under section 24 of the Banking Regulation Act, 1949.

Current level  

The Reserve Bank has defined that each SCB will continue to manage special assets in India, the profit of which will be less than 19 per cent of the total NDTL (not more than 40 per cent of its total DTL) if it is close to business on any given day.

Property for Special SLR

• Cash or
• Gold valuation not to exceed current market value,
• Investments in the following instruments related to "Statutory Liquidity Ratio (SLR) securities"
• Securities announced as of May 06, 2011.
• Treasury Bills of the Government of India.
• Government of India dated securities issued under the Market Stabilization Scheme and Market Financing Program.
• State Development Loans (SDLs) of the State Governments announced from time to time after the market lending program.

Procedure for calculation of SLR

The procedure for calculating the total NDTL for consideration of SLR under Section 24 (2A) of the Banking Regulation Act, 1949 is broadly very similar to the method of CRR apart from any exception on special liabilities directed to maintain CRR is not.

NDTL and SLR assets are treated according to the process of valuation defined by the Reserve Bank of India from time to time.

Maintenance of SLR on a daily basis

Unlike CRR, RBI does not approve or allow any adaptability in the maintenance of SLR, that is, if the SLR must be maintained at 100% or higher on a daily basis.

A punishment

If a banking company disappoints to maintain the required amount of SLR, it will be responsible to pay RBI in respect of the failure, at the reduction of bank interest rate at the rate of 3% pa ​​for that day If the failure persists on the following successful working day, punitive interest may be increased at the rate of five percent per annum above the bank interest rate for the required failure on the reduction.

Return to Form VIII (SLR)

Banks must submit before the 20th day of every month to the Reserve Bank, a return in Form VIII determining the quantum of SLR with the specifications of their DTL in India continued on alternate Fridays through the following month To support the Negotiable Instruments Act, 1881 at the end of business on the following working day on such Friday or if any Friday LA will be a public holiday.

Banks should also submit a statement as an attachment to the eighth set providing daily status of adjusted assets for consideration of agreement with SLR and the additional cash balance should be managed with RBI in the format managed by them.

30,000 housing stock to be built in Maharashtra in two years: Maharashtra government

Maharashtra cabinet minister Jitendra Awhad had said in the assembly on Tuesday that the Maharashtra government would stock 30,000 housing units in the next two years. He also said that the affordable housing scheme in Maharashtra will start from May 1 and is expected to be completed in the next two years and 10% of the houses constructed by the Maharashtra Housing and Area Development Authority are reserved for each police personnel and class IV government employee will go (MHADA).

"Unused land in 25,000 acres of land acquired by SEZ developers will be taken back by the Maharashtra government and after payment to these firms, the land will be used to construct affordable homes" The minister announced. He also said that the government is seriously paying attention to bring a bill on this issue because if it is done then more than 5 lakh affordable houses can be constructed in the next five years and this will change the state of poverty in the state.

The work of submitting the proposal for final approval will be done through a single-window system in an interval of 90 days.

With sufficient space in a unit, one does not have to worry about size issues. This is even true for the convenience of big families living under one roof. If you are looking to buy or rent a place in a city it will be an ideal choice as it is cost effective and accessible to all places of business as well as your office. Login with SuGanta Realty Services llp which is India's newest real estate website.

Impact of Corona virus Outbreak on Indian Real Estate

Corona virus outbreaks in Wuhan, China and the recent discovery in Delhi NCR have severely affected business sentiment.

The World Health Organization(WHO) declaring it a global health emergency, business sentiment has been severely affected. The outbreak has created uncertainty about trade and imports not only in China but worldwide. The real estate industry was not spared either. Traders are wary of going to mainland China and production is expected to decline in the coming months. This will have a direct impact on the prices of steel and other articles used in the construction industry in India.

Let us discuss in detail the potential impact of corona virus on Indian real estate and allied industries.

Why will the Indian real estate sector be affected?

India imports heavily from China the articles used in construction activities. Some of these are –

•     Iron and Steel Products
•     Technical construction equipment
•     Electrical equipment
•     Plastic and fiber elements
•     Solar panels

Although India is the second largest producer, it is severely lagged in terms of production capacity, which stands at 106 million tonnes. This heavy reliance on China for steel and steel products is a cause for concern for the industry. With production down in China, prices in allied industries are bound to rise, leading to increased costs and lowering the profit margins of real estate developers in India. The slowdown in the construction industry in China will result in downward pressure on global metal prices.

According to a recent CBRE report, in 2019 there were more than 300 Fortune 500 companies operating in Wuhan, China. Its outbreak will force companies to offer more flexible work practices such as 'work from home' and not co-working spaces. Businesses can delay real estate decisions and restrict new launches. However, the report suggests that mainland China will be more affected by the outbreak, and neighboring countries may only see an inter-dip in business activities.

An Opportunity?

From the Indian business point of view, the outbreak of corona virus may be an opportunity for Indian businesses to increase production capacity and speed up the "Make in India" campaign. The Government of India is encouraging steel companies to increase production capacity and gain larger market share. In the present scenario, the Ministry of Steel, Government of India is preparing a strategy paper for 10 million tonnes of special steel production at a cost of Rs 50,000 crore with 50,000 employment prospects.

In addition, solar panel manufacturing companies can also benefit from reduced supply and bring down long-term costs by increasing production.

In the same spirit, Pankaj Kumar Jain, Managing Director, KW Group, says, "The impact of the corona virus outbreak on the Indian real estate industry will be indirect. Although China is directly affected, supply-side constraints provide an opportunity to explore other avenues for raw material procurement.The industry is already facing global economic slowdown and sluggish demand. Although its outbreak is still not a threat in the Indian scenario, the government should take stringent steps to prevent the spread of infection, so that business sentiment is not further affected. "

In particular, with the recent report of Corona virus reaching Delhi NCR and Noida, the real estate industry needs to curse itself for even worse effects than before. However, the world has faced similar outbreaks like SARS virus, bird flu etc. in the past and has successfully recovered.

Every disaster is an opportunity to scale new heights. Indian real estate and allied manufacturing industries should explore positivity in the landscape and benefit by increasing production and indigenous innovation. The government will do well to prevent further spread of the virus and handle the industry in times of crisis.