Business

Bricks fall apart for construction sector

COVID-19 lockdown brings all site activities to a grinding halt; new housing launches fall 42% in Q1

The construction industry, which generally gets busy in the January to March quarter, has been severely impacted by the spread of COVID-19 and the subsequent lockdown, industry executives said.

From the time the WHO and Government of India declared the outbreak a pandemic, the construction industry experienced work disruptions and gradual lockdowns of its operations, said a spokesman for the Shapoorji Pallonji Group, one of India’s largest construction companies.

“After the lockdowns were declared, all site activities in Mumbai and the rest of Maharashtra have come to a grinding halt. This includes government as well as private projects,” the spokesperson said.

“Material supplies have stopped, and key subcontractors were unable to arrange resources for construction activities. All mobilised resources and plant and machinery are idling. Construction programmes have also been impacted due to these work stoppages,” he added.

Work involving imported items and foreign construction crews have also been impacted.

The COVID-19 crisis will seriously impact revenues of construction companies and almost all of them will face huge financial losses in the months to come, company officials said.

“The financial stress upon the construction sector is expected to worsen over the coming year. It is too early to estimate the full financial impact of the COVID-19 crisis,” they added.

“Even after the crisis is contained and work resumes, hopefully by end of April 2020, it would take another 7-8 months for things to return to normal,” the Shapoorji Pallonji company spokesperson said. “Moreover, the upcoming monsoon will additionally and severely obstruct construction works June 2020 onwards,” the spokesperson added.

‘Unprecedented crisis’

Srini Srinivasan, MD, India, Project Management Institute (PMI) said, “As the COVID-19 spread escalated in China in early January, it became evident that we are facing an unprecedented crisis.” “We do expect a slowdown in the April-June quarter. However, if COVID-19 is controlled by the end of the second quarter, we will see a rebound in the third and fourth quarters for PMI,” he said.

Housing slump

The pandemic has already had a considerable impact on the Indian housing sector.

Residential sales saw a 42% drop in the first quarter of 2020, compared to a year earlier, latest data from Anarock Property Consultants showed.

“In the first quarter of 2020, residential sales in the top 7 cities stood at 45,200 units, against 78,510 units a year ago. On a quarter-on-quarter basis, housing sales fell 24%,” Anarock chairman Anju Puri said.

“Meanwhile, new launches too fell by 42% annually from 70,480 units in Q1 2019 to approximately 41,200 in Q1 2020. Quarter-on-quarter supply also declined by approximately 21%,” he added.

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Printable version | Jul 5, 2020 9:44:25 AM | https://www.thehindu.com/business/covid-19-spells-doom-for-construction-industry/article31211507.ece

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