India’s residential real estate has been severely hit by a nationwide lockdown and sales could fall up to 35 per cent across seven major cities during the 2020 calendar year following the outbreak of Covid-19 in the country, according to property brokerage firm Anarock.

The pandemic would also adversely impact commercial (office and retail) real estate segment, which had been performing well during the last few years despite a slowdown in the overall property market.

While net office space leasing could fall by up to 30 per cent to 28 million sq ft this year from 40 million sq ft in 2019, the absorption of retail area might drop 64 per cent to 3.1 million sq ft from 8.5 million sq ft during the period under review.

“Covid-19 will hurt Indian residential real estate already grappling with subdued demand and liquidity crisis,” Anuj Puri, chairman of Anarock Property Consultants, said.

In its 32-page report “Covid-19 — Impact on Indian Real Estate”, Anarock said the outbreak of this disease and the resulting nationwide lockdown has severely hit the residential real estate business and the sector has come to a standstill.

“With a screeching halt to site visits, discussions, documentation and closures, the early indicators depict that we are likely to face a tough time for the next few quarters and the sector’s recovery has been pushed further away by at least a couple of years,” the report said.

Anarock has presented two scenarios while projecting housing sales for 2020.

In a base case, the consultant said that sales could drop 25 per cent to 1.96 lakh units this year from 2.61 lakh units in 2019 across seven major cities — Delhi-NCR, Mumbai Metropolitan Region (MMR), Calcutta, Chennai, Bangalore, Pune and Hyderabad.

In the “downside case”, housing sales might drop 35 per cent to 1.7 lakh units this year.

“Base case estimates assume the pandemic to settle down in one quarter and adequate stimulus provided to the sector. Downside case estimates assume that the pandemic extends more than a quarter with negligible or no stimulus for the sector,” the report said.

Many prospective homebuyers will consider postponing their decisions either to stay away from the project sites or in the expectations of a price correction, it added. Fresh supply of homes is likely to register an annual decline of 25-30 per cent this year from nearly 2.37 lakh units in 2019.