How will coronavirus affect Indian real estate?

At a production capacity of 928.38 million ton (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, which stands at 106 million ton. This heavy reliance on China for steel and steel products is a cause of concern for the industry. 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. The slowdown in the construction industry in China will have downward price pressure on global metal prices.

According to a recent report by CBRE, more than 300 Fortune 500 companies were operating in Wuhan, China, in 2019. The outbreak would compel the companies Real Estate News to offer more flexible work practices such as ‘Work from home’ and not co-working spaces. The businesses might delay real estate decisions and restrict new launches. However, the report points out that mainland China will be more affected by the outbreak, and neighbouring countries might only have a transitory dip in business activities.

If we look from the Indian business perspective, the coronavirus outbreak might be an opportunity for Indian businesses to increase the production capacity and give a thrust to the “Make in India” campaign.

The Indian Government is encouraging the steel companies to increase production capacity and grab a larger market share. The Ministry of Steel, Government of India, is preparing a strategy paper for producing 10 million tons of special steel at the cost of Rs 50,000 crore with 50,000 employment potential in the present scenario.

As the Chinese supply lines are skewed, the industry has an opportunity to explore other markets to procure raw material and decrease dependence on Chinese imports. This could be a blessing in disguise for the indigenous production of imported goods such as metal panels, steel bars, heavy machinery and coke.

Further, the solar panel manufacturing companies can also benefit from the reduced supply and increase production to bring down the long-term cost.

Echoing the same sentiments, Pankaj Kumar Jain, Managing Director, KW Group, says, “The effect of coronavirus outbreak on Indian real estate industry will be indirect. Though China is directly affected, the supply side constraints present an opportunity to Press Release Distribution Services In Real Estate explore other avenues for raw material procurement. The industry is already facing the headwinds of global economic slowdown and tepid demand. Though the outbreak is not yet a threat in Indian scenario, the Government must take tough measures to prevent the spread of infection so that the business sentiment is not affected further.”

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