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Housing sector to see muted demand with a significant reduction in the new launches in 2020: KPMG

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With possible slowdown in the U.S. and European economies, the potential investments incommercial real estate may either get curtailed or postponed till H2 of 2020, said the report.

The housing sector is expected to see muted demand with significant reduction in the new launches in 2020, according to a recent report by KPMG.

With possible slowdown in the U.S. and European economies, the potential investments incommercial real estate may either get curtailed or postponed till H2 of 2020, said the report.

According to the company, fresh equity investments into the country’s real estate sector could slow down, with almost all sub-sectors going through turmoil. There is also a high possibility of postponement of REIT launches (earlier scheduled for listing in 2020), which would mean further liquidity pressure on real estate developers,

In order to reduce the impact, KPMG, in the short term recommended no interest repayment for 3-6 months for developers which can be extended to 9-12 months, no EMI repayments for six months for the home buyers and lending rate for realty projects to be fixed at a lower repo rate.

In the longer term, the company recommended to rxtend registration timelines granted to promoters by a year, removing the cap on tax benefit against interest paid on housing loan for FY20 and FY21. It also recommended NPA classification to be extended beyond 90 days for stressed projects.

Industrial (logistics and warehousing) sector is also expected to get impacted in the short run, but the bounce back for this segment is expected to be the strongest, as global corporations look to shift their manufacturing base to other Asian countries (such as India, Vietnam and Cambodia) from China, the report said.

ALSO READ: COVID-19 pandemic has led to negative effects on the building construction industry in Europe says Geberit

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