The impact of Coronavirus, COVID-19 pandemic, is being felt across sectors of the Indian economy. Now with a complete lockdown of three weeks in progress, most segments of the economy have come to a grinding halt. Retail realty is no different; retailers across the country are struggling to meet payroll and rent payment obligations. To tide over the problem mall operators, realtors, and developers are offering some kind of relief to their tenants.
In the wake of the COVID-19 crisis, realty developer Lodha Group has offered full waiver for its retail partners. Accordingly, retail partners, who are renting spaces in Lodha’s retail properties, will be exempted from paying rent since March 15, until the government permits reopening of retail operations, and that maintenance charges will be reduced as per actual expenses during this period. This decision taken by Lodha Group will benefit 200 retailers. In a release the company has said that, while there is no clarity with respect to interest deferment or waiver to ease developer’s burden arising from this lock down, the group has decided to give the rental waiver during this national emergency.
A report by Anarock Property Consultants states that the top eight cities of India have 126 malls sprawling over more than 61 million sft and more than 100 malls have multiplexes attached. While Lodha Goup has taken the lead, mall operators on Delhi- NCR and also other cities are reviewing the impact of COVID-19 pandemic and might offer some relief to their tenants. According a business daily, the operators are discussing possible scenarios since their relationship with the retailers is long term and with business taking a big hit, paying rent will be a difficult task.
“Though, we are not legally bound to give any relief to the tenant, as a credible mall operator and for the sake of long-term relationship, we are in talks to give some relief to share the burden of loss,” said an operator, to the business daily. Other credible developers too are talking to their retail fraternity about probable options to tide over the crisis. According to Samir Jusuja, MD, PropEquity, most of the retailers are on revenue-share model and since the revenues have gone down, this would automatically bring down the rentals, which should be of some relief to the retailers.
Residential Realty Will Continue to Face Heat
While retail realty is facing the brunt of COVID-19, the residential real estate will be further stressed. With the government taking an inarguably necessary hard-line stance to curtail the spread of the virus, the lockdown has stalled construction activity and will lead to project delays in the future. This is a reality the sector must accept and live with, said Anuj Puri, MD Anarock Property Consultants. It is thus not surprising that monthly data trends for the month of March, when most advisories and lockdown were imposed, saw a steep decline in both new launches and housing sales against the preceding two months.
“The fallout of the lockdown is that many key markets will have almost zero construction activity at the project sites. This will further strain several developers’ financial health,” said Prashant Thakur, director & head – Research, Anarock Property Consultants. A conservative estimate is that as many as 15.62 lakh units across the top 7 cities were in various stages of construction as on 2019 end. Of this nearly 8.90 lakh units were in MMR and NCR alone. With construction activity almost coming to a standstill, homebuyers will have to brace themselves for another wave of delayed project deliveries.