COVID-19:

Impact on the
Indian Real Estate Sector
And the Way Forward

TM

A COMPANY
 Foreword

The Indian real estate sector has been reeling under the pressure of weak consumer demand, challenging
economic environment and NBFC liquidity crisis. The Covid-19 pandemic and the ensuing lockdown have
created an unprecedented situation for everyone. It brought all economic activities to a standstill and
livelihoods are under threat. Under the bleak market scenario, all the concerned stakeholders were forced
to look hard at their operating model and take extreme measures to survive. However, a great amount
of resilience and adaptability have been demonstrated by the builders and developers. Our primary
collective effort should be to safeguard the lives and ensure the welfare of our employees and labourers. The
government has come up with stimulus measures to support the economy, but stronger support would be
required to help the economy recover. Although it is difficult to make any prediction on what lies ahead after
the coronavirus, we tried to find out how the industry is responding to the crisis and the way forward in a short
survey.

We have put together this report after surveying more than 300 leading builders from across the country.
It provides some interesting insights on how the real estate industry leaders have been dealing with the
Covid-19 pandemic. Although it’s challenging times for the sector, most of the respondents are hopeful of a
recovery in 3-6 months. I thank everyone who participated in the survey and hope you will find the insights
helpful to understand the current and future industry outlook. In the meantime, stay safe, stay well!

Vineet Sehgal
Chief Marketing Officer, Quikr

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A COMPANY
 Partners Speak

Rohit Cariappa,
Director-Sales and CRM, Assetz Property

As the impact of Covid-19 continues to evolve, we at Assetz have embraced the new normal
and are focusing on continuity of our business and service to our customers. There definitely
has been an effect on business because of the complete lockdown. Never theless, thanks to
the trust reposed in our brand, we are continuing to clock sales. These are unprecedented
times, but we are confident that real estate will always be the most important asset class.
Therefore, this is only a passing phase or a short term disruption and the residential real estate
sector is poised for a strong comeback, as home affordability is at its best. In fact, with the
partial lifting of the lockdown, our sales offices have reopened with all the precautionary
measures in place as stipulated by the government.

Vivek Garg,
Director, NVT Group

Real Estate industry was under stress with liquidity crunch for some time due to GST,
demonetization, RERA and NBFC crisis. Going by the assessment of impact in terms of loss
in revenues, relief measures provided during the lockdown and reviewing various packages
offered around the world by various governments, an estimated Rs. 22 lakh crores stimulus
is required for India to mitigate the impact of the disruption and economic activity due to
Covid-19. It would be necessary for every industry to look at innovative steps and policy
measures to spur the economic activity. The solutions need to result in an increase of
revenue for the government and increase of economic activity without significant financial
outlay by the government.

Ajith Alex George

Director, 42 Estates

The Coronavirus outbreak has infected lakhs of people worldwide. However, there lies an
opportunity in every crisis and Covid-19 looks no different. Businesses with sustainable
models and having a strong foothold on technology are indeed the future. Home sales
will begin to gain traction and leading developers with good track record will be the main
beneficiaries of this change. The sector will have to face short term problems of three kinds:
Labor, Financial, and Demand. But we expect demand to pick up soon after the Reserve
Bank of India cut lending rates by 75 basis points last month. Organized players will clearly
have a vantage point to recovery.

TM

A COMPANY
 Current Scenario In India

The novel coronavirus outbreak and its impact on the economy have pushed the real estate
sentiment index to an all-time low in Q1 2020. Both residential and commercial real estate sectors
are expected to be hit in terms of launches, sales and prices. Just when the real estate sector started
recovering from demonetization, structural reforms including GST and liquidity issues arising out of
the NBFC crisis, the lockdown has brought the industry to a grinding halt.

On-going construction activity has been stopped and it will lead to a further delay in completion of
projects. The residential sector, which was already struggling under inventory overhang and lack of
consumer confidence, is headed for an overall slump in demand. The affordable housing sector will
be hit harder as a large number of buyers in this segment suffer job losses and salary cuts.

Developers have sought changes in the housing law, additional funds and relief in loan repayment
to help them tide over the disruption. The CREDAI also urged the ministry to include the Covid-19
pandemic as ‘force majeure’ in the Real Estate Regulation Act.

Our survey found that business has come to a standstill for a large number of builders, while others
are facing a huge drop in demand. Construction halts and labour shortage will pose major
challenges to the residential sector, however, the majority of the respondents are expecting a
recovery within six months. Significant efforts have been made to ensure the safety and welfare of
the employees and labourers, which is also critical for a smooth recovery post-lockdown.

The Covid-19 pandemic could prove to be a decisive turning point, with developers already
sharpening digital tools to sell homes and offices online. Virtual tours, a nascent but growing
technology, is rapidly gaining traction in lockdown times. Refundable booking amounts, cashback
schemes, gifts on bookings and exclusive arrangements with prop-tech platforms are some of the
major innovations introduced to push sales at the time of the lockdown.

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A COMPANY
 COVID-19 Cripples The Indian Real Estate Sector

The Covid-19 outbreak and the ensuing lockdown have brought the real estate business to a screeching halt.
With little enquiries, site visits, discussions and closures, the sector is likely to face a tough time for the next few
quarters. A major share of respondents to the CommonFloor survey confessed that the Covid-19 crisis has
significantly reduced the demand while nearly two-thirds said their businesses have come to a standstill.

Impact on demand due to Covid-19 pandemic

36.8%
Significantly reduced demand
2.2%
Higner demand

6.2%
No change in demand

21.1%
33.7% Marginally lower demand
Business has come to a standstill

Source: CommonFloor Builder Survey May 2020, n=320

The Covid -19 crisis is rapidly evolving and no one is able to tell when it will be contained or what its long-term
impact could be. Nearly half of those responded believe that the effects of the pandemic will hurt the business
from 3-6 months, while most others foresee impacts lasting up to 12 months.

Builders anticipate impact of COVID-19 to continue

26.6%
6 - 12 months 9%
12 - 18 months

2.5%
18 months

43% 18.1%
3 - 6 months 1 - 3 months

Source: CommonFloor Builder Survey May 2020, n=320

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A COMPANY
 Major Challenges Ahead

Construction halts and labour shortage will make it difficult to launch new projects and complete the ongoing
ones. This pandemic has retracted the buyer confidence to its lowest levels ever, which will push home buying
decisions to the distant future. The survey found that, in a major setback to the industry, there will be significant
drop in sales.

Setbacks expected by builder in the coming months

40.1%
Decline in funding

22.3%
Procurement of raw materials

3.6%
Other factors

75.2%
Decline in sales
43.9%
Availability of labour

* This was a multi select question hence response percentage exceeds 100% *Source: CommonFloor Builder Survey May 2020, n=320

Battered by Covid-19 lockdown, India's formal sectors are resorting to massive layoffs and pay cuts. However,
the real estate sector seems to be following a slightly different trend, as most builders and developers say the
crisis hasn’t had a major impact on the employees yet.

Impact on employee and labour

No impact on employees 42.6%

Salary cut 34.5%
Hiring freezes 31.0%
Reduction of temporary staff 16.6%
Reduced working hours 9.1%
Furlough days 8.8%
Employee layoffs 6.0%

* This was a multi select question hence response percentage exceeds 100% *Source: CommonFloor Builder Survey May 2020, n=320

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 Ensuring Welfare of Migrant Labour

In an attempt to keep their employees and labourers protected from contracting the disease, the builders are
waging a war against the virus itself. Masks have been made compulsory at all work sites, while some builders
have made wearing gloves mandatory.

Safety measures implemented by builders

Masks made mandatory 66.8%

6ft social distancing 54.2%
Gloves made mandatory 53.9%
Hand santitizer/ Handwash stations 47.3%
Temperature checks 45.1%
Jobsites currently inactive 32.6%
Limited entry of traders at site 28.8%
Video surveillance 26.3%
No sharing of tools 19.4%

* This was a multi select question hence response percentage exceeds 100% *Source: CommonFloor Builder Survey May 2020, n=320

Strict lockdown measures, such as severing transport links, have taken a toll on India’s estimated 100 million
migrant workers. Our survey revealed that builders are taking good care of the labourers stuck at the work sites,
providing them with free food, medical aid and sanitation facilities.

Welfare initiatives for labour

55.0%
Sanitization facilities

46.2%
Medical assistance

8.9%
Other measures

57.5%
Free food
51.3.%
Social distancing measures

* This was a multi select question hence response percentage exceeds 100% *Source: CommonFloor Builder Survey May 2020, n=320
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A COMPANY
 Initiatives Taken By Builders During Lockdown

Most of India’s leading builders were quick to respond to the lockdown and rolled out a host of CSR and other
welfare initiatives. Here are a few glimpses.

Brigade Foundation donated

Rs. 2.5 Cr towards the welfare of
10,000 construction workers.

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A COMPANY
 Initiatives Taken By Builders During Lockdown

Apart from social welfare activities, top builders have launched several marketing campaigns to promote
discounts, offers and virtual tours to boost demand.

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A COMPANY
 Way Forward For The Real Sector in India

According to CREDAI, the real estate sector contributes to 10% of the national GDP and is the 2nd largest
employer in the country. Our survey found that relief on loans is the top priority for builders when it comes to
government relief measures. However, they have been seeking project completion time and exemption from
penal charges to be extended by a year.

Support expected from the Government

66.4% 41.2%
Extension of RERA deadlines Additional funds

48.4%
Waive penal interest

71.1%
Relief on loans

* This was a multi select question hence response percentage exceeds 100% *Source: CommonFloor Builder Survey May 2020, n=320

The Covid-19 crisis will significantly expedite the shift to digital and shake up the business landscape. Even
before Covid-19 impact, 92% of companies thought their business models would need to change towards
digitization.According to our survey, more than half of the respondents said that they will shift to online bookings,
increase their digital marketing spends and introduce digital walk-through of projects.

Looking ahead to a digital-led recovery

Online home buying 53.0%

Virtual client meetings 50.8%
Virtual team meeting 43.9%
Virtual tours 43.9%
Self-guided tours 29.8%
Yet to figure / no plans 6.9%

* This was a multi select question hence response percentage exceeds 100% *Source: CommonFloor Builder Survey May 2020, n=320

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A COMPANY
 TM

CommonFloor is one of India’s leading real estate brands

that connects home Buyers & Sellers. Along with brands like
QuikrHomes, IndiaProperty, QuikrRealty in association with
HDFC - Quikr is one of the top players in the online real
estate market in India. Our real estate platform strengths
include an average of 5 Million monthly customers, 1 Million
property listings, 30,000+ builders, and 1.72 Lakh+ projects.

To know more about the products and solutions offered by CommonFloor please contact:

Philip Mathan Address: Sub No. 5,6,7,8 & 9, Rachenahalli,(No. 167, Dr. S.R.K Nagar Post)
VP, National Sales Head Krishnarajapura Hobli, Bengaluru, Karnataka 560045
Tel: 9884082400 Email: research@quikr.com
Email: philip.mathan@quikr.com