Real Estate Sector India

Real Estate’s ride through Covid-19 and way forward

The outbreak of the novel coronavirus, referred to as Covid-19, has struck at the roots of some of the world’s largest countries. After WHO declared Covid-19 a Pandemic (the “Pandemic”), many countries announced measures to contain its spread. In what is considered as a timely step, Government of India on March 24, 2020 imposed a 21-day nationwide lockdown (“Lockdown”) under the provisions of Disaster Management Act, 2005 (“DMA”) (which is likely to get extended further), during which various establishments including malls, offices etc., were directed to suspend their operations.
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COVID-19 - Impact on Real Estate

With a lot of disruption and backlog due to coronavirus, all industries, along with the real estate sector, have taken a massive hit. The year 2019 was not such a progressive year and everyone was counting on 2020 to recover and improve from last year’s lows. However, the real estate sector is in a deep standstill on the back of the global economic crisis, coupled with the COVID-19 situation.

This scenario calls for anyone to take precautions and due to restrictive movement because of the travel ban and the stock market crash, developers for one are not looking to take any chance in blocking their money in launching any new projects. At this point, one of the challenges being faced by them is the impact on contracts/agreements due to COVID-19, which are currently in motion/existence. The question being raised is whether the COVID-19 pandemic calls for a force majeure consideration in the existing contracts. Force majeure clause acts as a protection to parties wherein due to any unforeseen circumstances, either of the parties are unable to fulfil their commitment as per the agreed terms and conditions of the contract. To put it simply, due to any acts of god such as fire, flood, war, etc., parties are unable to perform their part as it is not reasonably within the control.
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REIT IPO Exit

*An eight-part series covering the commercial and legal considerations of REIT listings in India. Click here to read Part 2.

Institutional investors have demonstrated a steadfast interest in Indian real estate in recent years. Private equity investments in the real estate sector peaked at $2.5 billion in the first quarter of 2019 – the highest since 2008.[1] With the lion’s share of investments being cornered by commercial office spaces, retail and hospitality sectors, the introduction of the Real Estate Investment Trust (REIT) framework in India comes at an opportune time, providing investors with an additional avenue for potential exits.

However, as the dust settles over India’s first REIT listing, it is now apparent that a REIT IPO is vastly different and distinct from an IPO by a company in many respects. Given the inherent intricacies and nuances of the REIT framework, investors seeking to exit via a REIT listing will need to re-calibrate, re-assess, and re-think their investment strategies, holding structures, investment documentation as well as exit horizons to expediently navigate the new regime.
Continue Reading Part III – Exit Stage: Preparing for a REIT IPO Exit