Mumbai, April 2
India’s real estate market is likely to see a significant price correction for the first time in a decade as the coronavirus pandemic stalls businesses across the country, according to a half dozen industry insiders.
“Property prices may come down by 10-20% across geographies, while land prices could see an even higher reduction of 30%,” said Pankaj Kapoor, chief executive of real estate consultancy firm Liases Foras, adding there hasn’t been such a correction since the global financial crisis. Since then, prices in most markets have held steady despite lending and shadow banking crises.
In the last year, things had taken a turn for worse because of a liquidity crunch at shadow banks — which are big lenders to both developers and property buyers — forcing companies to offer discounts. Now buyers can expect far steeper cuts.
“It is a complete buyer’s market. So if somebody really wants to do the deal, they have to reduce prices,” said Ram Raheja of S Raheja Realty in Mumbai.
Banks are also worried that if developers can’t liquidate their stocks, it could lead to defaults and add to a $140 billion pile of bad loans.
“The profits of most developers have already taken a beating, and there is no profit as such left in the system. Everyone is just trying to survive by maintaining their cash flows,” said Ashok Mohanani, vice-president of realty body NAREDCO in Maharashtra. — Reuters
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