The outbreak of coronavirus in Wuhan, China, and a recent detection in Delhi-NCR has impacted the business sentiment severely. The Indian real estate industry would even be affected indirectly as allied businesses like steel, heavy machinery, and other raw materials are heavily captivated with Chinese import.
Coronavirus has infected over 60,000 people worldwide and has claimed over 1,400 lives in China. With the World Health Organisation (WHO) declaring it a worldwide health emergency, the business sentiment is severely impacted. The outbreak has created an excellent deal of uncertainty regarding trade and imports, not only in China but worldwide. the real estate industry is additionally not spared. The traders are wary of visiting China and are skeptical of reduced production within the coming months. this may have an immediate pertaining to the costs of steel and other articles utilized in the development industry in India.
Let us discuss the possible impact of coronavirus on Indian real estate and allied industries thoroughly.
Why would the Indian real estate sector be affected?
India heavily imports articles utilized in construction activities from China. a number of these are –
- Iron and steel products
- Technical construction equipment
- Electronic equipment
- Plastic and fiber elements
- Solar panels
At a production capacity of 928.38 million tons (MT) in 2018, China remained the biggest producer of steel. Although India is that the second-largest producer, it lags severely in terms of production capacity, which stands at 106 million tons. This heavy reliance on China for steel and steel products may be an explanation for concern for the industry. With production in China taking place, the costs within the allied industries are sure to increase, thereby increasing the prices and reducing the profit margins of property developers in India. The slowdown within the construction industry in China will have downward price pressure on global metal prices.
According to a recent report by CBRE, over 300 Fortune 500 companies were operating in Wuhan, China, in 2019. The outbreak would compel the businesses to supply more flexible work practices like ‘Work from home’ and not co-working spaces. the companies might delay real estate decisions and restrict new launches. However, the report points out that China is going to be more suffering from the outbreak, and neighboring countries might only have a transitory dip in business activities.
An opportunity for India?
If we glance from the Indian business perspective, the coronavirus outbreak could be a chance for Indian businesses to extend the assembly capacity and provides a thrust to the “Make in India” campaign.
The Indian Government is encouraging the steel companies to extend production capacity and grab a bigger market share. The Ministry of Steel, Government of India, is preparing a technical paper for producing 10 million plenty of special steel at the value of Rs 50,000 crore with 50,000 employment potential within the present scenario.
As the Chinese supply lines are skewed, the industry has a chance to explore other markets to acquire staples and reduce dependence on Chinese imports. this might be a blessing in disguise for the indigenous production of imported goods like metal panels, steel bars, heavy machinery, and coke.
Conclusion
Conclusively, with recent reports of Coronavirus reaching Delhi-NCR and Noida, the important estate industry must brace itself for a good worse impact than previously thought. With the threat of infection affecting human lives, the important estate sector can expect a dip in property visits and reduced buyer interests. However, the real estate has faced similar outbreaks like SARS virus, bird flu, etc. within the past too and has successfully recovered. Every calamity is a chance to scale new heights. Indian real estate and allied manufacturing industries must find positivity within the scenario and benefit by increasing production and indigenous innovation. the govt would have best to prevent further proliferation of the virus and handhold the industry within the times of crisis.
Note:- The views expressed above are for informational purposes only based on industry reports and related news stories.