Can Reverse Migration Spur Housing Demand in Tier-2 & Tier-3 Cities Post-COVID-19?
Indian real estate is bracing itself for a very new post-coronavirus (COVID-19) world. One significant trend may be reverse migration spurring housing demand in Tier-2 and Tier-3 cities, says a research report. 
 
According to a report 'India Real Estate: A Different World Post COVID-19' by Anarock Property Consultants, cities like Lucknow, Indore, Chandigarh, Kochi, Coimbatore, Jaipur and Ahmedabad would be the main beneficiaries of the reverse migration of professionals who have lost their jobs in the metros, or are likely to. These returnees will benefit from the cost of living and superior infrastructure that many Tier-2 and Tier-3 provide.
 
At present, top seven cities account for almost 70% of India's residential market, with the remaining 30% accounted for in Tier-2 and Tier-3 cities. This ratio may well change in times to come.
 
  
According to Anuj Puri, chairman of Anarock Property Consultants reverse migration is already very visible among migrant labourers, and this trend can further percolate to skilled professionals who have been or may be off-rostered. 
 
He says, “Smaller towns and cities would consequently see a spurt in housing demand. Primary demand may skew towards rental housing – purchase demand would initially come from local investors keen to meet the rental demand.” 
 
“Many non-resident Indians (NRIs) will also return to India amidst dwindling job prospects, particularly in the US and European nations, which account for nearly 70% global cases. For them, the top-7 cities would be the best options but many will consider smaller cities where they can be close to their families. Finding suitable employment for reverse-migrating Indians in smaller cities may prove to be challenging," Mr Puri added. 
 
ANAROCK’s recent consumer survey taken during the lock-down period indicates that of the respondents who preferred to invest in Tier-2 and Tier-3 cities in 2020, 61% are end-users and almost 55% are aged under 35 years. 
 
At least 47% of respondents are focused on affordable properties priced within Rs45 lakh, followed by 34% who are looking for mid-segment homes priced between Rs45 and Rs90 lakh.
 
The residential segment will see a manifold increase in demand for townships projects, which offer a controlled environment. 
 
In terms of supply, township projects have less than 5% overall share in the top-7 cities as on date.
 
Further market consolidation is expected with the increased preference for branded developers. Financially strong organised players are likely to occupy 75%-80% market share in the coming years.
 
According to the research note, in office real estate, social distancing norms may increase the per capita office space allocations even as a segment of employees will work from home. During the past decade, per capita office space allocation reduced from 100-125 sq. ft. to 75-100 sq. ft. in the pre-COVID-19 period of January 2020.
 
 
“Safety and hygiene will become the top priority, even as contactless operations and automation will increase. Decentralization of operations to ensure business continuity will be a trend reversal from prominent consolidations over the past few years,” the report says.
 
In retail, Anarock sees online businesses gaining momentum. It says, “eCommerce giants have already added over 5,000 people to their delivery fleet during the lock-down period. Their consumer base expanded to senior citizens who have embraced technology in the COVID-19 era.”
 
 
Malls have been shut for over a month and sales have nose-dived. At the same time, local shops have gained customer confidence. “Reopening the malls remains a challenge. Mall revival will come with caveats. With hygiene and sanitation taking centre stage, malls which can offer these will benefit most in times to come,” Anarock added.
 
According to the property consultancy firm, while every segment in realty has been affected due to COVID-19, warehousing, industrial and logistics as well as data centres would be the first to recover from the impact in one to two quarters. 
 
 
The possible recovery time for residential and commercial officer market would be four to six quarters, while hospitality, alternatives like co-working, co-living and student housing and retail would take more than six quarters for recovery from the COVID-19 impact, the report says. 
 
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    COMMENTS

    homaielavia

    1 month ago

    With slum pockets residents in Mumbai moving away, it is a rare opportunity for Govt. of Maharashtra to take over these lands, redevelop the area and build vertical accommodation for the returnees. Divide the entire slum pocket into 3. One part for business/corporate establishments, one for all Govt. offices and one for housing the returning slum residents. Sale of one-third area at premium rates to business establishments can finance restructuring of the other two-thirds. Subsequently sale of redundant high profile South Mumbai locations occupied by Govt. can generate revenue which will see the coffers of Maharashtra Govt. positive enough to facilitate welfare schemes for the people of the State who are the country's highest tax payers. What is needed is the will and the courage to counter the ganglords and land mafia.

    tillan2k

    1 month ago

    another misinformation by builders to hike property prices... building activity may increase in rural areas

    Fitch Downgrades JSW Steel and Tata Steel to ‘BB-’ With Negative Outlook Due to Weak Demand
    Fitch Ratings has downgraded the issuer default ratings (IDR) of two Indian steel companies - JSW Steel Ltd (JSWS) and Tata Steel Ltd (TSL) - to 'BB-' from 'BB' after completing a portfolio review on lower demand and weak prices for steel.
     
    In a statement, the ratings agency says, "The portfolio review follows our expectation of a decline in steel demand in India for the year ending March 2021 (FY21), compared with our earlier assumption of a mid-single-digit volume increase, due to the economic impact of the coronavirus pandemic." 
     
    "The Indian Steel Association has forecast an 8% drop in domestic demand in FY21, and we assume standalone sales volume for JSWS and TSL will decline by 6%. We also expect lower earnings before interest, taxes, depreciation and amortization (EBITDA) margin in FY21 due to the volume drop and weaker steel prices. We assume volume and margins will increase significantly in FY22 from a weak base, supported by a broader economic recovery," Fitch added.
     
    Fitch has also downgraded Tata Steel UK Holdings Ltd's (TSUKH) long-term IDR to 'B-' from 'B' with negative outlook. The agency has also downgraded JSWS's and TSL's senior unsecured rating to 'BB-' from 'BB'. 
     
    Simultaneously, Fitch Ratings says it is withdrawing TSUKH's long-term IDR because the company is no longer issuing debt and there is no Fitch-rated debt outstanding following refinancing by TSL for its European operations in January 2020. 
     
    According to the ratings agency, JSWS's downgrade is based on its expectation that the company's gross debt/EBITDA leverage, including acceptances and a long-term customer advance, will remain above its previous negative rating action threshold of 4.0 times over the next three years. 
     
    "We estimate JSWS's gross leverage increased to above 6.0 times in FY20 from 3.3 times in FY19 due to sharply lower EBITDA and negative free cash flow (FCF). JSWS's sales volume fell and its EBITDA margin narrowed in FY20 due to weaker demand in India, lower steel prices and the extension of its working-capital cycle towards the end of the financial year due to stoppage of business activity following government-mandated restrictions to control the spread of COVID-19," Fitch says.
     
    Commenting on TSL, the ratings agency says, its ratings downgrade is based on its expectation that consolidated gross debt/EBITDA leverage of the company will remain above its previous negative rating action threshold of 4.0 times over the next three years. It says, "We estimate TSL's leverage increased to around 7.0 times in FY20 from 3.4 times in FY19 due to sharply lower EBITDA and negative FCF. We estimate TSL had lower standalone sales volume and EBITDA margin in FY20 due to the weaker demand in India and lower steel prices, along with an EBITDA loss in Europe."
     
    "We estimate TSL's EBITDA will decline further in FY21 and leverage will increase to above 10.0 times," Fitch says, adding, "We expect leverage to gradually improve to around 5.0x in FY22 due to higher EBITDA, controlled capex and positive FCF. We also assume the European operations will start contributing to EBITDA from FY22, helped by TSL's ongoing efforts to improve efficiency and cut costs. Gains in Europe that are slower than our expectations could exacerbate the impact of weak industry conditions on TSL's financial and overall credit profile, and this risk is reflected in the negative outlook."
     
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    Hindustan Sanitaryware sues ICICI Securities for report saying Jaquar became top brand
    Leading sanitaryware brand, HSIL Limited, has a filed a case against prominent brokerage ICICI Securities for a "defamatory and disparaging" research report, which said that Jauguar has become Indias No. 1 sanitaryware brand.
     
    HSIL said the report led to "widespread defamation" of HSIL and "disparagement of its products and brand".
     
    This is one of the rare cases where a company filed a suit against a leading brokerage for a research report. There have been some instances in the past, but they have been far and few. Brokerages have analysts tracking sectors and companies who then put out research reports about a company.
     
    "A highly defamatory, libelous, false, disparaging and malicious report published by ICICI Securities Ltd. titled 'Jaquar pips HSIL; becomes India' No.1 sanitaryware brand' on 28th April 2020 which was intended to be read by the public and it was widely publicised to all their clients, thereby leading to widespread defamation of the HSIL Ltd. (now Brilloca Ltd. post demerger) (hereinafter referred to as Company) and disparagement of its products and brand," HSIL said in a filing.
     
    On the failure of ICICI Securities to withdraw the report and issue a clarification as to the efalse and misleading' contents of the said report, the company has filed legal a suit titled eHSIL Ltd. & Anr Vs ICICI Securities & Ors' at the Delhi High Court.
     
    The Delhi HC vide the above said order directed deletion of the report from Linkedin by Jaquar & Company Pvt. Ltd, HSIL said in the filing.
     
    The said report was based on complete falsehood to substantially lower and damage the reputation and goodwill of the company, HSIL said. The report was also uploaded by Jaquar & Company on its Linkedin account.
     
    "The report was brought to the notice of the company on April 28 whereby the company contacted the concerned persons at ICICI Securities and brought to their notice the fallacies and illegalities of their report. On May 6, ICICI Securities, after acknowledging the incorrect data in its report, suo moto published an addendum (second report) to its false report to cover and save its reputation," it said.
     
    During the hearing, ICICI Securities undertook to withdraw the report dated April 28, and substitute it with the report dated May 6.
     
    "The Delhi High Court was pleased to pass the order, directing ICICI Securities to communicate the fact of the substitution of the report to all concerned. The court vide its order also directed deletion of the report dated April 28 from Linkedin by Jaquar & Company," HSIL said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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