Coronavirus impact on Indian Real Estate Companies

The Coronavirus epidemic that started in China in late 2019 continues to spread around the world. The latest figures as of February 28 show more than 83,000 reported cases in Mainland China and hundreds more around the world. The outbreak has created a great deal of uncertainty regarding trade and imports, not only in China but worldwide. The real estate industry is also not spared. China’s residential property developers have reported significant declines in contract sales in January. Equally, there are lots of sectors in India that are potentially affected by Coronavirus in China. This will have a direct bearing on the prices of steel and other articles used in the construction industry in India. Further, read on the Coronavirus impact on Indian Real Estate Companies to know more…

Impact on Coronavirus Indian Real Estate Companies

India heavily imports articles used in construction from China.  Those include – technical construction types of equipment, electronic equipment, solar panels, plastic and fiber elements, iron and steel products. At a production capacity of 928.38 million tons (MT) in 2018, China remained the largest producer of steel. Although India is the second-largest producer, it lags severely in terms of production capacity. There is a huge amount of steel that gets imported to India from China. However, India being one of the heavy importers of Chinese steel spare parts will affect its manufacturing industries in a lot of ways.  With production in China going down, the prices in the allied industries are bound to increase, thereby increasing the costs and reducing the profit margins of real estate developers in India.

Wuhan and Hubei states of China have been severely affected by Coronavirus which is also known as the prime steel-producing hubs in the country. According to the recent report by CBRE, the outbreak would compel the companies to offer more flexible work practices such as ‘Work from home’ and not co-working spaces. However, the report points out that Mainland China will be more affected by the outbreak and neighboring countries might have a transitory dip in business activities.

Can this work as an opportunity?

As the Chinese supply lines are slanted, the industry has an opportunity to explore other markets to procure raw material and decrease dependence on Chinese imports. So, if we look from the Indian business perspective, the Coronavirus outbreak might be an opportunity for Indian businesses to increase production capacity. The Indian Government is encouraging the steel companies to increase production capacity and grab a larger market share. Further, the solar panel manufacturing companies can also benefit from the reduced supply and increase production to bring down the long-term cost.

In conclusion

Coronavirus has proliferated to as many as 60 countries across the globe and has claimed over 3,000 lives worldwide. With the threat of infection affecting human lives the effect of Coronavirus outbreak on the Indian real estate industry will be indirect and the real estate sector can expect a dip in property visits and reduced buyer interests. Thus, considering what has happened in Asia, real estate investors and owners can begin to prepare for the possibility of difficult conditions…

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