Covid-19 second wave has had a debilitating impact on real estate: Credai

While the industry is still assessing the impact in terms of fall in sales, walk-ins and inquiries are next to nil, and people who had earlier shown interest are now postponing buying decisions.

The residential real estate sector in India is facing tough times as customer inquiries and walk-ins have slumped, hit by subdued buyer sentiment. Developers say they expect recovery to be long-drawn-out, which could take months.

Last year, the reduction in stamp duty in Maharashtra, coupled with heavy discounts and offers, led to a sharp surge in residential sales despite the Covid-19 pandemic. However, the second wave of the pandemic, which was far more brutal and affected a larger number of people, has dented sentiments severely, developers have said.

While the industry is still assessing the impact in terms of fall in sales, walk-ins and inquiries are next to nil, and people who had earlier shown interest are now postponing buying decisions.

A survey of 5,000 developers from 217 cities conducted by the Confederation of Real Estate Developers’ Associations of India (Credai) found that 98% of developers are facing reduced customer inquiries, and 42% are experiencing a 75% decline in customer inquiries. Furthermore, the second wave has caused 95% of customers to postpone their purchase decisions.

Harsh Vardhan Patodia, president, Credai National, said, “The second wave has had a more debilitating impact on the real estate sector than the first wave, and added factors such as the recent spike in [prices of] construction material, including steel and cement, have contributed to an over 10% increase in construction cost for more than 88% developers.”

Financial constraints and a liquidity crunch are further adding to the problem, with 77% developers experiencing issues in servicing existing loans, 85% facing disruptions in planned collection, and 69% facing issues in disbursement of customer home loans, the survey said.

Boman Irani, president-elect, Credai National, said, “The second wave hit fast, hard and it hit home. Our walk-ins have completely gone down. Our customers who were looking at buying bigger houses and were willing to invest are now postponing buying decisions.”

Irani said though business has not come to a complete halt and customers will come back, the interim period is critical for developers, who will require sops from government and support from financial institutions to get through it.

Satish Magar, chairman, Credai, said since lockdown restrictions are being lifted in phases, people are still sceptical about visiting sites. “Unless people are able to see and feel the products again, sales are not going to pick up, and it is going to take some time,” he said.

Credai is seeking a stamp duty waiver or reduction to help increase demand, input tax credit on GST and others to improve financial viability of projects, and loan restructuring to aid in alleviating financial constraints. The association is also seeking single window clearance for all projects, commencement of work to expedite project completion, and extension of validity of existing approvals by nine months.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Source link


Day trading guide: 2 stock recommendations for Monday

Snapping four weeks winning streak, Nifty lost 0.7% this week; during the week it made record high at 15902, however sudden change in...

iPhone 12 series dream run continues as Apple grabs one-third of global smartphone revenue in Q1 2021: Counterpoint

The total global revenue estimated in the same research for the same quarter was about $100 billion(about Rs 73 lakh crore).Apple’s iPhone 12...

Russia says to boost military ties with Myanmar as junta leader visits

Russian Defence Minister Sergei Shoigu told visiting junta leader Senior General Min Aung Hlaingid that Moscow is committed to strengthening military ties with...

How to Prevent Presbyopia: Causes and Treatment Options

Presbyopia, a condition that affects how well you can see close up, is caused by the natural aging process. It is estimated that over...