PANAJI: The surge in Covid-19 cases has dealt a blow to the real estate sector, with apartments and homes becoming more expensive and running into delays.
A study by the Confederation of Real Estate Developers’ Association of India (Credai) found that construction activity — particularly in the affordable and mid-range segment — has been affected due to the exodus of migrant labourers and delays in approvals.
The study, which was conducted between May 24 and June 3, found that 90% of builders surveyed in Goa have faced a labour shortage ever since the second Covid-19 wave swept the state.
For customers, this would mean further delay in moving into their homesthat they booked before the pandemic.
Easing BlocksThe study shows that 97% of the builders registered with Credai expect their projects to be “further delayed due to the onset of the second wave” in Goa.
“In case of real estate, even after the lockdown is lifted, it will take months to mobilise labour and material.
Though states have exempted construction activity from the lockdown, labourers are moving back to their villages as there is a big surge in infections across major cities,” the report said.
Credai says that the real estate sector was already bearing a cascading effect of the first wave as the disrupted supply chain had barely started to recover, and now, with states imposing fresh lockdowns and curfews, the supply chain will continue to stay affected.
Normalcy, said Credai’s report, could take six to nine months to return.
The association’s analysis also spells bad news for those who wanted to buy a new home as the market has seen construction cost increase anywhere between 10% to more than 20%.
Prices of cement, steel, labour and other supplies have become expensive.
Among the builders surveyed, 48% said construction cost has increased by 10-20% on account of rising material and labour cost, while 45% said that real estate costs had increased by more than 20%.
All these factors are expected to take a toll on real estate transactions and project timelines going forward.
Goa’s real estate market is expected to remain stagnant for several quarters as homebuyers take a more cautious approach and turn risk averse.
The fear of job losses and loss of an earning member will deter high-value purchases such as a new home.
Goa’s real estate firms have already noticed that customer inquiries and walk-ins have reduced by more than 75% since the onset of the second wave.
Along with this, 97% of the builders also said that customers have either stopped paying or are delaying payments, a strong indication that the pandemic has affected people’s finances.
However, those customers who have taken credit from housing finance companies provide some relief as 41% of the builders said that they have no problem in sanction or disbursement of customer home loans.
With cash flows affected, workers returning home and projects deliveries delayed, property developers face financial challenges.
Credai said that 62% of their members are struggling to service their existing loans.
While most of the real estate projects were operating at less than 75% of the capacity, 38% of the real estate firms said they are operating at less than 25% of their capacity.