It’s being called a “historic decline”, and with good reason. The first six months of 2020 saw Indian real estate falter on multiple fronts — home sales, launches, office transactions and completions. The numbers do not make for good reading.

Knight Frank India’s half yearly report for 2020 reported that residential sales across eight top property markets fell by 54 percent in H1 CY20, as just 59,538 homes were sold between January and June. That number was 129,285 in H1 CY19. Similarly, residential launches plummeted by 46 percent as 60,489 homes were launched versus 111,175 launches last year.

Office Market Records Dismal Transactions & Completions

In the office-space market, merely 17.2 million square feet worth of transactions were all that could be completed between January and June across eight top property markets. Knight Frank’s report reports that this is a 37 percent drop from 27.4 million square feet that saw transactions last year, in these markets.

Similarly, a 27 percent drop has been registered in commercial real estate completions as 17.3 million square feet of commercial real estate was completed in the last six months, versus 23.9 million square feet between January and June last year.

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A bulk of transactions and sales in office and residential sectors took place pre-COVID — in the first quarter of CY20. In fact, April, May and June, the report states saw near-negligible real estate transactions, sales and completions.

“With economic uncertainties creating significant headwinds, we expect the office space take-up to remain cautious,” said Shishir Baijal, chairman and managing director, Knight Frank India, in a statement, “Most occupiers are expected to hesitate in committing to expansion in the current market scenario and may delay their leasing decisions for later.”

Labour Crisis, Capital Availability Continue To Worry

Speaking exclusively to CNBC-TV18, Knight Frank executive director, Gulam Zia said there was no way of predicting when commercial real estate could possibly revive. “While we are talking about lockdowns ending, a lot of cities are re-locking down,” said Gulam, “So, there is confusion all across and we cannot see any hope in real estate turning around.”

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There are two factors that have worsened the existing situation — reverse-migration of construction labour and capital availability for developers. “With no labour available, we don’t see a turnaround anytime soon; it will take much longer than what we expect,” Gulam added.

‘Impact Not Fully Known, Yet’

The impact of the pandemic and multiple lockdowns has come on the back of bumper year for commercial real estate in 2019. A total of 60.6 million square feet worth of transactions took place pan-India last year, even as 61.3 million square feet of commercial real estate was completed in this period.

The reported impact of COVID-19 on this year, Knight Frank admits, isn’t fully known since the ongoing moratorium on banks is still in effect. “The actual impact will have to be tracked in the upcoming quarter, because the moratorium is still on,” said Gulam, “So, landlords haven’t been pressuring tenants to pay rents, yet. Only once the moratorium is lifted, will we know the actual pain which will be apparent only in the next month or two.”

Affordable Housing Losing Steam Too

While the residential market has been sluggish in the last couple of years, what will worry developers this year is that usually consistent performers like affordable housing haven’t fared well this year. “The share of affordable housing in the overall transactions has, for the first time, come to below 50 percent,” said Gulam, “That share of the overall market is shrinking. So transactions in the sub Rs 50 lakh price tag, which used to come to the rescue of the real estate industry for so long seems to be losing steam too.”

The affordable housing segment saw a strong market between 2014 and 2015 on the back of Prime Minister Modi’s promise of housing for all by 2022.

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While luxury real estate transactions may have flattered even if only for a fleeting moment this year, Knight Frank India says these are mere outliers: “There is definitely no sign of revival in luxury housing,” said Gulam, “Even if we are talking of one or two instances of high-value transactions happening in Mumbai, they are outliers.”