Coronavirus outbreak: Disappearing migrants hit affordable housing

An under-construction building. Representation pic

Among the many sectors hit with the COVID-19 health crisis, affordable housing too will see a major dip in 2020. Around 6.1 lakh affordable units (priced below R40 lakh) were under construction across seven cities until the lockdown was announced, a real estate report mentioned. This is over 39 per cent of the total 15.62 lakh under-construction (UC) units in NCR, MMR, Pune, Kolkata, Bengaluru, Chennai and Hyderabad.

MMR alone has nearly 1.72 lakh affordable units under construction with the unsold affordable stock as of March 2020 being 68,970 units.

In Pune, under-construction affordable housing stock is close to 1.31 lakh units, while unsold affordable homes stand at nearly 46,630 units.

"The Government's 'Housing for All' push coupled with benefits to buyers and developers brought on an avalanche of affordable housing projects in India," says Anuj Puri, chairman of Anarock Property Consultants, adding, that "as much as 40 per cent of the new supply added across the top seven cities in the past few years was in the affordable segment."

Pankaj Kapoor, founder and managing director, Liases Foras, a Real Estate Rating and Research Private Limited said, "The lockdown to contain the novel Coronavius pandemic will have a long-lasting adverse impact on the real estate industry in two-fold - construction work stopping and demand contraction."

He also said that with the migrant labourers getting adversely impacted, construction work would come to a grinding halt, which will adversely impact the credit and cash flows of the developer, as banks would not release payments due to non-completion of construction work as scheduled.

"The only segment of real estate industry where sales were seen in recent past was the affordable housing segment, both the luxury and premium housing projects are already going through a rough patch, and I foresee a reduction of almost 30 to 40 per cent in sales in the upcoming financial year, in comparison to last year in the affordable housing segment," Kapoor added.

'Horrible recession'
The lockdown has also led to a global recession and subsequent loss of employment or payment cut, and many who would have otherwise opted for the investment in housing may now put the plan on hold, Kapoor believed.

Senior property lawyer advocate Vinod Sampat echoed similar opinions. "Purchasers will be skeptical and cost of construction is likely to increase with banks reluctant to lend owing to liquidity crunch," he said.

Housing activist Ramesh Prabhu too said that the aftermath of COVID-19 will be seen a few months after the lockdown concludes and "a horrible recession will begin in the global market."

6.1 lakh
Total no. of affordable units under construction in 7 cities

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