ICRA predicts overall real estate inventory to decrease by 40-60%.

ICRA expects the combined sales volume of the completed and under-structured inventory to decrease by 40-60% due to Covid-19 for the current year. The preference for a completed inventory is therefore expected to continue to favour developers with a greater share of these projects.

It anticipates that expenditure on ongoing projects will decrease by approximately 30% in FY21 due to the pandemic. The development of the project had also been affected by decreased labour force participation and disruptions in the raw material supply chain, which are attributed to ongoing localised lock-downs on services which are not essential.

New launches, which were already in decline since the focus on deliveries was increased, are likely to be delayed further.

In the Year 2021, ICRA expects consumer collections to decrease by approximately 35%-40%. Committed receivables from booked orders were also affected because payments based on milestones were postponed because of the previous halt to construction work. Projects for the self-funded segment were more likely than the home-loan-funded segment to experience a disruption in collections as banks also pay the developers.

Pay cuts/employment losses, in some situations, led to the re-assessment of purchaser credit score by HFCs, thereby affecting incremental payouts. The sharp decline in home loans will, however, to some degree boost housing demand, with the interest rate for the first time in 15 years falling below 8%, the company said.