Assessing the impact of the so-called dipping economic situation on the construction sector  

Anuj Puri, Chairman, ANAROCK Property Consultants speaks to Ranjana Konatt while forecasting the future of the construction sector while assessing the economic slow-down within the Indian market 

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Assessing the impact of the so-called dipping economic situation on the construction sector

By Ranjana Konatt | Editor

Amidst an economic slow-down and a liquidity crisis in India, the real estate market has taken a hit in the third quarter of the year 2019, highlighted Anuj Puri, Chairman, ANAROCK Property Consultants. Elaborating on the factors that have led to the update, he said: “A combination of factors such as the ‘shraadh’ period (considered inauspicious for purchase), the ban on subvention schemes and a prolonged monsoon has resulted in below-par sales.”

According to ANAROCK research, housing sales in Q3 2019 witnessed a quarterly decline of 20% across the top seven cities from 68,600 units in Q2 2019 to 55,080 units in Q3 2019. Pointing towards a cautious approach taken by developers, new launches fell by 34% over the same period from 69,020 units in Q2 2019 to 45,230 units in Q3 2019. Also, on a year-on-year basis, housing sales fell by 18% while new launches fell by 13% in Q3 2019 over the corresponding quarter in 2018. “Today, most developers are facing a liquidity crisis. Banks, financial institutions and PE funds have turned away from investing in the residential real estate segment. NBFCs have been extensively leveraged and they are now exercising extreme prudence in investments,” he added. This has caused serious delays in construction and the delivery of residential assets across the country. However, Puri highlighted that not all is negative and gloomy, as there are indicators that can still steer the economy and the real estate sector away from the current situation. “The government’s recent move to address the slowdown though the stimulus package is expected to arrest any further slow-down and the concentrated expenditure is likely to stimulate demand,” he added. Besides, the recent corporate tax cut is also expected to spur investments from both domestic and foreign investors giving a much-needed boost to the liquidity woes. These measures along with the ensuing festive season are likely to bode well for real estate in the coming quarters.

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