The significant slowdown in residential real estate market, which could last for a couple of years, is bad news for the entire economy.
"Since real estate and construction play a major role in economic activity and employment generation, the downturn will pull down the overall GDP numbers," says Sanjeev Prasad, Senior ED and Co-Head, Kotak Institutional Equities. Given that long drawn slowdown will have a seriously damaging effect on several sectors, companies and stocks. After realty, building material companiescement, steel, paints, etc. will be the worst affected due to a slowdown in demand, say experts. Banking and financial services companies will be the next in line as the real estate slowdown will push up their non-performing assets (NPA). And, finally, FMCG companies, that were riding on rural consumption, will also take a hit as the overall downturn impacts rural income.