COVID-19 Impact: Real Estate Sector Seeing Massive Lay Offs, Pay Cuts

COVID-19 impact on real estate sector
COVID-19 impact on real estate sector

More than 60,000 jobs in the real estate sector have been slashed so far since the COVID-19 pandemic crisis hit India. As per industry reports, around 200,000 employees (including the white-collared) in the real estate sector are expected to be laid off due to the pandemic. The pandemic has reportedly usurped about 15 million jobs until now between March 25 and June 10 across various industries and sectors.

The real estate sector employs about  6-7 million people, including 300,000 white-collar employees. Hit badly by the coronavirus pandemic, the developers are now hustling to cut down as much costs as possible. The sales have touched record bottom and are expected to remain muted in the coming months.

While nothing much is selling and is not expected to sell for next six to eight months, the collections have dropped significantly as well. Most of the companies are not building any new projects. They are just finishing the previous projects to honour their commitments and protect their name and brand image.

The firms have not only gone into mass-firing mode but also have resorted to massive salary cuts to the effect of 25-30 percent.

“As a result, every area of the business right from design, architecture, project management, engineering and procurement to sales, marketing and facility management is getting reviewed and efforts are on to right-size those,” Business Standard quoted CIEL HR Services Director and CEO Aditya Mishra, as saying.

A report by non-broking real estate research firm Liases Foras states that for each month of the lockdown, there is a revenue loss of 8.3 per cent. The report further mentions that by June-end, revenue loss in the residential real estate market alone will stand at 26.58 per cent, which will rise to 35.07 per cent by July-end.

The real estate sector was already under the multiple effects of demonetisation, RERA, GST rollout and NBFC crisis. However, the sales have picked up since the end quarters of 2019. Ironically, 2020 was expected to be the sector’s turnaround year and the stakeholders were looking forward to a spectacular industry growth this year. 

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