Real Estate Relief: The Developers’ Views -by Mousumi k Sachdeva
The outbreak of Covid19 has shattered almost every sector of the economy in the Nation. The Real Estate developers were in severe troubles failing to complete their projects due to the sudden Pandemic and the fall of funds. In such a situation, Finance Minister Nirmala Sitharaman announced a relief scheme for the real estate developers considering to treat Covid19 as force majeure. Further, States, union territories can suo moto extend registration and completion date of realty projects by six months if projects are registered on or after March 25, 2020.
“Due to COVID-19, projects stand the risk of defaulting on RERA timelines. Timelines need to be extended”, she said.
She also added that the Regulatory authorities may extend this for another period of up to three months if needed.
RERAs will also issue fresh project registration certificates automatically with revised timelines and extend timelines for various statutory compliances under RERA concurrently, she said.
“These measures will de-stress real estate developers and ensure completion of projects so that homebuyers are able to get delivery of their booked houses with new timelines,” she said.
Mr Sanjeev Daruka, the Founder of RE-QUEST Buildwell and Secretary of RECA Kolkata states his view on this,
“Inclusion of COVID in the definition of ‘Force Majeure’ or Act of God, and empowering the State/UT regulatory authority to suo moto revise the date of registration and completion of projects by 6 months, is a boost for the already stressed real estate sector. This will not only provide more time to complete the project without any liability for delay in completion of the project but will also prevent them from facing the legal cases on account of delay limited to this 6 months’ extension window.
For potential home buyers, it could be excellent buying opportunity especially those with job security or cash flow. Residential segment is likely to correct by 10-15%.
More of liquidity measure but MSME and Migrant labour is true in stimulus form. Obtainable low-cost rental housing will boost the migrant labours thereby helping them to avoid slums. Unauthorised colonies will be banned. Residential problems of the cities will be overcome. Manufacturing opportunities will increase, Real estate will get encouragement. Money spent on logistic will help Agriculture efficiency.”
Thakur Pradeep Singh, Deputy Manager (Sales) from Sumadhura Infracon Pvt Ltd, Hyderabad, Telangana, says,
“Good presentation which was already allocated. Nice Mathematics. Irrespective of what will happen they are simple expecting price will go down. Apart from relaxation on completion from RERA nothing much served by govt to real estate industry. Main course yet to come. As of now both can only do watch the game.”
Mr Uma Sankar Sahu, Project Head of Akshyat Group of Industries, Odisha, opines,
“According to UD Ministry, it will issue an advisory to the States and Union Territories and accordingly extend the registration and completion of projects where no individual applications will be required. RERAs will issue fresh project registration certificates automatically with revised timelines. Hence, we builders appreciate the decision. This is likely to boost our sentiments and help us to tackle the issues. In our case the Customers/Buyers always trusted our commitment and scheme. Anyway, they don’t have any complaints over the recent schemes declared on behalf of COVID19 pandemic, rather they need the best service, good quality in said timeline.”
However, the two major reliefs announced seem to have not satisfied the needs of the Real estate developers or builders. The real estate sector on Wednesday although welcomed the two major reliefs announced by Finance Minister Nirmala Sitharaman, indicated that it expects the government to address its principal demand of a one time restructuring of all loans and take concrete steps to revive the demand cycle.
Niraaj S from Nashik says,
“My 2 projects are pending for completion certificate. Due to this, the customers who have bought the shops can’t take ownership and we are still to receive payment from them. Nothing much is help for the small builders. Due to labour migration, it would be difficult even with 6 months.”
Ramesh Shaw from Siliguri expresses,
“Actually, I’m very much depressed about repeated lockdown and business at standstill and no scope for improvement in immediate future. As all clients I was working out with have put on hold their requirement in fear of market being very unstable and unsafe with regards to investment decisions and uncertainty about the second wave predicted in mid-September and October and the sector is getting negative responses from the clients and clients expecting hard negotiations with property owners and dealers to get maximum value for money and discounts on current deals to go ahead with or looking for smaller ones in relation to commercial property rent n leases. As market conditions are not favourable few have dropped their pre lockdown deals and looking for lesser space to accommodate their business and cut short on staff at all levels.
Developers will not benefit much from their business as clients are on wait n see options, so demand will dampen their sales business and will delay their projects. Thus, market price rise will cut down their profits.
I was in talks with few developers for big joint venture and all have backed down and surrendered. New projects are being put on hold. Under construction projects are lying idle due to dearth of manpower.
Registry charges if reduced can push up with immediate pending registry to be full filled. Circle rates if not a hurdle can make lots of business in real estate. If circle rates are high, and market destabilises then no registry will take place. 2years will take time to stabilise the market. GST if cut on flats can make sales jump.”
The government has also announced Rs 30,000 crore Special Liquid Scheme for Non- Banking Finance Companies, Housing Finance Corporations and Micro Finance institutions which now carry a guarantee by the Government of India.
Niranjan Hiranandani, National President, National Real Estate Development Council (NAREDCO) and apex industry body Assocham, said that the first set of announcements add up to almost Rs 6 lakh crore, but fiscal stimulus for real estate wasn’t part of it.
With all views for and against, the practical outcome is yet to be experimented. With thousands of labours already leaving for their native villages, the dearth of manpower can be a troubling plight too. Six months extension would depend on many factors and truly the game is yet to be played now.