Developers Resort To Cost Control Measures
Hit by the coronavirus pandemic, real estate developers have resorted to layoffs and pay cuts and are focusing on cost control measures as sales are likely to remain muted in the coming months. Construction of a large number of real estate projects across cities has not restarted even after lockdown restrictions were lifted due to a severe liquidity and labour shortage that developers are facing. While the labour shortage may be resolved in the coming months, the capital shortage is likely to linger much longer, that may induce a spiral effect leading to delay in possession of homes, cash flow issues and significant rise in cost of capital. According to industry estimates, around two lakh employees (including the white-collared) in the real estate sector are expected to be laid off due to the coronavirus crisis. More than 60,000 jobs have been slashed so far. A report by non-broking real estate research firm Liases Foras said that for each month of the lockdown, there is a revenue loss of 8.3 per cent. The report stated that by June-end, revenue loss in the residential real estate market alone will stand at 26.58 per cent, which will rise to 35.07 per cent by July-end. As many as 30,000 white-collar jobs are expected to be lost in the sector in the next three months. If the Covid-19 situation gets under control in another two-three months, jobs in the construction sector will return to normal levels by January-March 2021.
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