The dreaded Covid-19 pandemic has hit all the sectors and the real estate sector is no exception. Apart from labour shortage, delays in approvals and rising prices of construction materials, among other factors, have led to projects getting delayed. On the whole, the industry is facing numerous challenges.
Confederation of Real Estate Developers Association of India (CREDAI) national vice-president G Ram Reddy said compared to the first wave, the second wave hit the industry hard. Though construction works are being taken up in top gear by many builders and developers, sales had not been encouraging. This apart, receivables got affected owing to the lockdown and financial constraints due to the impact on sales, he said.
“We expect things to get back to normalcy by the Dasara-Diwali season. But there are reports that a third wave is likely to hit. We are keeping our fingers crossed,” said Ram Reddy. To ascertain the position of builders’ and developers’ projects and seek their feedback and suggestions on the prevailing circumstances, CREDAI conducted a national study from May 24 to June 3, involving over 13,000 developers from across the country.
The study found that 98 per cent of the developers were facing reduced customer enquiries or walk-ins, and 42 per cent were facing a drop of more than 75 per cent in customer enquiries. More importantly, 95 per cent of customers delayed their purchase decision due to the second wave.
About 92 per cent of the developers said they were facing labour shortage on their sites while 83 per cent said they were working with below 50 per cent capacity after the onset of the second wave. About 95 per cent feel their projects would be delayed due to the second wave while construction costs had gone up by more than 10 per cent for 88 per cent of developers. Not just the customers, developers too are facing financial constraints.
Nearly 77 per cent of the developers who availed project finance are facing issues of servicing the existing loan while collections are not as planned for 85 per cent of the developers. About 69 per cent are facing issues in sanction and disbursement of customer home loans while almost 90 per cent feel the impact of the second wave on their business was far more intense than that of the first wave, the study revealed.
Suggestions by developers
About 78 per cent of the developers feel Stamp Duty waiver or reduction will help create demand.