MUMBAI: Residential real estate sales across India is expected to decline 20-25% in the current year as prospective homebuyers are likely to defer their purchases owing to the Covid19 led economic sentiments and job security concerns.

The resultant pressure on developers to sell may trigger a 5-10% price reduction across segments, said property consultant Cushman & Wakefield. These discounts could be in the form of minimal booking amount that is fully refundable with no cancellation or various subventions, financial and price protection offers.

Established players in premium and luxury housing segments may hold on to price levels though lenders and sales pressure could trigger a 15-20% discount of previous price quotes. Residential launches are also expected to witness a 40-50% dip this year. Cushman expects housing sales to increase 15-20% next year though.

“A revival will come, but many factors not in the least a successful vaccine development will be crucial to the shape of the recovery curve and improvement in India’s economic fortunes and the real estate sector. Economic recovery in the US and Europe will drive growth of Indian real estate, especially the office market,” said Anshul Jain, Managing Director –India and South East Asia, Cushman & Wakefield.

In commercial real estate too, rentals are expected to dip 5-10% this year with vacancy rate of around 15%. However, long tenures and already incurred fit-out spends will make it impractical for occupiers to break leases. Institutional landlords and developers will strategic in offering rental concessions and restructuring deals to safeguard long-term commitments and occupier relationships.

Mid-sized developers may be more flexible to offer some rent relief in the short term, while smaller developers will be amenable to rental concessions and better incentives for occupiers. According to Cushman & Wakefield, this will provide tenants a limited opportunity for 6-9 months for negotiating reduced costs. Ends

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