Since the 2016 Note Ban laid the market down, India’s real estate industry has been struggling to get back on its feet, but 2020 was not the year to stand tall. With the economy’s crippling demand pandemic, the market is now looking to the New Year with the expectation of a sharp revenue rebound.

Stable house values, low-interest rates on home loans, concessions and freebies provided by developers, and reduced stamp duty rates offered by some states are what the industry believes will assist in the rebound following this year’s 40-50 percent decline in housing sales and office space leasing.

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Over September, the market, which experienced one of the world’s strictest lockdowns lasting over two months, saw subdued demand for housing and office accommodation, even as developers swiftly embraced digital technologies to reach prospective customers.

The property market started to see some momentum only in October, fuelled by pent-up and fresh festive demand that was further consolidated towards trustworthy developers.

However, data collected by property consultancy Anarock shows that housing sales in the top seven cities—Delhi-NCR, Mumbai Metropolitan Area (MMR), Bengaluru, Hyderabad, Pune, Chennai, and Kolkata—fell 47 percent year-on-year to 1.38 lakh units in 2020.

Stamp duty cut by the government of Maharashtra provided builders and buyers alike with great relief and was instrumental in reviving demand in Mumbai and Pune. The balance stamp responsibility was absorbed by several developers to improve their revenue. In a nation enamored with the idea of a sharing economy, the pandemic highlighted the importance of homeownership.

On the results in 2020, CREDAI Chairman Jaxay Shah of the realtors’ apex body said that in the last few years the real estate sector has “borne the repercussions of fiscal and non-fiscal reforms” be it demonetization, GST, or RERA implementation.

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“While the sector has been under pressure owing to all the reforms, the COVID-19 pandemic made things worse with the sector is reeling under the worst ever crisis,” Shah said.

Over the past few years, the real estate industry has been facing headwinds. Thanks to the COVID-19, the situation became more complicated… uncertainty over employment and livelihoods deprived the market of its potential buyer base, leading to near-zero demand, “The real estate sector has been facing headwinds for the past few years. The situation became tougher owing to the COVID-19… uncertainty over jobs and livelihoods robbed the market of its potential buyer-base leading to near-zero demand,”

Post-lockdown, he said revenues in most cities have increased but have yet to hit pre-Covid peaks.

“There are indicators that point towards recovery in the sector, but at a less than desirable rate,” Magar told PTI.

The President of CREDAI said the government and the RBI have taken measures to assist the industry, but those have not resolved the protracted problems because in the upcoming budget he has requested both demand and supply-side interventions.

The Centre invoked force majeure provisions under the Real Estate (Regulation and Development) Act (RERA) to stretch the deadline for completion of projects by six to nine months in order to help developers tide over the crisis.

Interest subsidy for the middle-income community was extended until March 2021, when a framework to offer affordable rentals to migrants/urban poor was introduced. Also, one-time debt restructuring was approved.

When several central ministers kept telling developers not to wait for price hikes to unload their unsold inventories, the industry requested improvements in tax laws. Section 43 CA of the Income Tax Act was then relaxed to facilitate primary sales of flats up to @ 2 crores at a price that can be 20% below the circle rate from the previous 10% gap.

The government-backed SWAMIH stress fund of about 25,000 crores, launched last year to complete about 4.5 lakh units, has been operationalized and an investment of over 10,000 crores has already been authorized, but many builders protested about tight eligibility requirements to secure funds.

These initiatives provided developers with some breathing space but were not enough to cause a V-shaped housing market turnaround.

India’s office market, which has done well in recent years, amid the overall downturn in the property market, was unable to defend itself from the COVID-19 attack. According to JLL India, net office leases are expected to slip to 25-27 million sq ft in 2020 from a record 46.5 million sq ft last year.

The decline in office demand was unavoidable as firms postponed their decisions on growth and embraced the Work from Home (WFH) strategy for workers.

The office market, however, was full of activity, drawing tremendous acquisitions with developers monetizing their industrial portfolio to slash debt.

India’s second Real Estate Investment Trust (REIT) — Focus on the different Business Parks REIT — was listed after a successful public issue of ~4,500 crores in the midst of the pandemic, indicating that the office market’s long-term growth narrative remains intact.

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The year saw some big-ticket real estate sales, including the divestment to Brookfield of a broad commercial portfolio by the RMZ company for around 14,500 crores. For about @10,000 crore, the Reputation Company sold its commercial properties to Blackstone.

Indiabulls Real Estate and Embassy Group, among other developments in the industry, agreed to combine their ventures.

The National Corporate Law Tribunal (NCLT) accepted the NBCC’s offer to purchase Jaypee Infratech when the Centre seized charge of Unitech’s crisis-hit management, boosting expectations of unfinished ventures stranded by thousands of homebuyers.

Retail real estate was the hardest affected of all categories, as shopping center operators had to incur massive losses due to retailers’ rental waivers and poor footfall. Operators for co-working and co-living were also seriously affected.

“The current is challenging, & things are hard but the best for the Indian real estate sector is not far away,” Shah said.

The industry is looking to the New Year of optimism, despite the devastation of 2020.

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