The current COVID19 pandemic has impacted the lives of millions of people across the globe. Many economies have also been impacted due to the lockdown called to prevent Corona Virus spread. India and its economy have also been hit hard. And one of the worst-hit sectors in India is the real estate and infrastructure; the pain was already there which got prolonged now. Can there be a way out? What the government and the industries should do to revive themselves? Santosh Sinha, Editor, RealtyMyths, talked to Mr. Ravi Saund, Founder-Director, Emperium Realty to find out the answers to these questions. Here are the excerpts of the conversation.
Q. COVID19 has created a catastrophic impact on the economy. The real estate sector, which was already reeling under pressure, is now sinking further. Experts believe until the demand is generated into the market, it is difficult for the sector to revive. Do you think this can be achieved, and how? What measures the government and the banking system should take to boost the buyers’ sentiments?
A. The Corona pandemic has brought about a need in all sectors to re-invent themselves. Real estate also will have to keep up with the times. Keeping the global and local trends in mind, the demand is expected to be slow but steady for this financial year. Builders ought to focus their energies on delivering their existing projects. The initiative by the Govt. to provide a boost to credit providers and home loan beneficiaries should help. The banking institutions need to focus on speedy approval and disbursement of home loans.
Q. The government has announced some relief measures like an extension of CLSS benefits by a year. It has also given some relief to the NBFCs which can resolve the real estate sector’s funding issues to some extent. However, there are not many direct benefits given to home buyers. How do you explain this situation? Do you think a significant reduction in the Stamp Duty or the Home Loan rates could have changed the game on the ground?
A. In order to boost the economy effectively, a good Government should give well thought out incentives to boost the markets and industries instead of handing down the money directly to consumers. Comparing to the reduction in terms of stamp duty and other taxes, easier accessibility to home loans is preferable.
Q. In the last 2 years, the majority of real estate deals happened in the affordable housing segment. Have the homebuyers understood the value of the money or are these due to the deliberate push to this segment by the central government?
A. It’s true that in the last two years, a majority of real estate sales are from the affordable housing segment. The reason being that it had the maximum deficit as far as the supply of homes was concerned. The incentives that have been given in that sector by the government to boost affordable housing have also helped the same.
Q. The manufacturing sector has been hit hard by this coronavirus lockdown. Though it is opening up now, it is expected that the impact would continue for the next two-three quarters, resulting in an increase in the prices. If the prices of cement, steel, and other raw materials increase, will it not impact the cost equation of the affordable housing projects? What measures, you think, the developers should take to keep the unit prices affordable and lucrative for the homebuyers?
A. It is very difficult to predict if the cost of material will go up or down currently because on one side, the supply chain is disrupted and the risk of temporary labor scarcity has emerged. Also, on the other hand, construction work at government and private infrastructure and buildings will take some time to start and get back to their regular pace. Therefore, the demand for the required material would be less. At this point in time, the developers should focus on delivering their existing projects instead of increasing their margins or trying to cover costs.
Q. How are you managing things at Emperium Realty? How is the response in the market and do you plan to expand your footprints beyond Panipat in the near future?
A. We, at Emperium Realty, are focused on reducing the time of delivery of our current project “Emperium Happy Homes” in Panipat. We believe that the increase in cost can be adjusted by completing & delivering the project before the scheduled time. Also our upcoming project “Emperium City” in Panipat, we would only start once we give possession of “Emperium Happy Homes”. In the short and medium-term, we want to focus only on Panipat. In the long term, the World is our Oyster and we shall head towards feasible opportunities.