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Indian Residential Sales Could Decline upto 60% in FY21

BY Realty Plus

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According to ratings agency ICRA, the overall sales volume for completed and under-construction inventory to reduce by 40-60% on account of COVID-19 during FY21. The overall demand risks for the sector have increased, which is also reflected by a decline in new sales and the associated collections in Q1of FY21. The preference for completed inventory is expected to continue, thus favouring the developers having higher proportion of such projects. Further, the steep reduction in home loan rates may aid housing demand to some extent, with home loan interest rates having dropped below 8 per cent for the first time in 15 years. Committed receivables from already booked sales have also been impacted, given that some milestone-based payments have been deferred due to stoppage of construction activities earlier. ICRA noted that projects catering to the self-funded segment have witnessed a more significant disruption in collections as compared to the home loan funded segment, as banks continue to make payments to developers. Consequently, in FY2021, ICRA expects collections from customers to decline by around 35-40%. Overall project cash flows are expected to be impacted by slower collections leading to reduced inflows.  

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