Covid-19 to dampen Indian real estate’s recovery over 6-12 months: Report

MUMBAI: The ongoing Covid19 pandemic is expected to keep Indian real estate subdued over the next 6-12 months forcing sector entities to contract operations, revisit planned developments, expansions, and investments, said consultancy and advisory firm KPMG.

The companies likely to come up with counter strategies to mitigate the impact focusing on cost optimization, liquidity improvement, space design, layout efficiency maximization, re-negotiations of contracts, and calibration of business operating models across the board.

As the situation moves closer to normalization with lockdown easements across India and globally in the medium term, recovery process, according to the firm, will see rapid traction, bringing new opportunities within specific real estate segments.

However, it believes, with staggered revival, the long-term outlook for real estate sector in the coming 18–24 months may likely emerge positive. Albeit social distancing norms and workplace health safety regulations affecting contraction, the real estate industry’s structural transformations will bring forth latent opportunities within untapped real estate segments such as data centers, integrated supply chains, warehousing, self-sustaining industrial parks, design efficiency processes.

“With this recent pandemic outbreak, the real estate sector is likely to be handicapped in the short term, impacting over 250 related industries and economic sectors…Ongoing financial woes as well as an unprecedented global crisis of the pandemic have unsettled the investment climate and almost no industry is insulated from its impact,” said Chintan Patel, Partner and Leader – Building, Construction and Real Estate, KPMG in India

He is of view that in addition to capitalizing on the intervention proposed by the government, the industry should resume operations post lockdown by leveraging technology innovations for enabling employee and consumer health safety standards, design flexibility, cost optimization and consumer engagement, focused localization of supply chains, reorganization of business models, which is likely to revive activity, accelerating Indian real estate’s turnaround over the coming 12–18 months.