95% developers fear project delays

Mumbai: Over 95 per cent developers feel inevitable project delays if no urgent relief measures are announced by the central government and the Reserve Bank of India (RBI) to rescue the real estate sector. These delays are attributed to a range of factors, with 92 per cent developers experiencing labour shortage at sites, 83 per cent developers working with less than half the workforce, and over 82 per cent of developers facing project approval delays, according to a survey carried out by realty body Credai.

Harsh Vardhan Patodia, national president, Confederation of Real Estate Developers Association of India (Credai), said: "The real estate sector showed tremendous resilience post the first wave, despite little relief measures from the government. However, the second wave has prompted us to reflect and re-evaluate the growth path of the industry, and we felt it was vital to assess the challenges faced by the customers and industry partners in light of the recent developments. The findings reveal that the second wave has had a more debilitating impact on the real estate sector than the first wave."

Credai released findings of the survey conducted across north, east, west and south zones between May 24 and June 3, 2021, to assess the impact of second wave of Covid-19 on real estate sector in India. Conducted with stratified sampling method, the exploratory survey witnessed a first-of-its-kind extensive participation of 4,813 developers from 217 cities, providing crucial insights on the industry sentiment and the range of challenges faced by the real estate sector.

Added factors such as recent spike in construction materials including steel, cement etc have contributed to more than 10 per cent increase in construction cost for more than 88 per cent developers. Various financial constraints and liquidity crunch are further adding to the problem, with 77 per cent developers experiencing issues in servicing existing loans, 85 per cent developers facing disruptions in planned collection, and 69 per cent are facing issues in disbursement of customer home loans.

The survey findings by the apex body of real estate developers also put spotlight on changing consumer behaviour, resulting in slowing of demand due to decrease in enquires and site visits. A staggering 98 per cent developers are facing reduced customer enquiries and 42 per cent developers are experiencing a 75 per cent decline in customer enquiries. Furthermore, the report reveals that the second wave has caused 95 per cent of customers to postpone their purchase decisions.

"We have made a representation to the government citing the current survey and requesting the government to infuse urgent financial stimulus and initiate quick progressive measures to assist recovery. As a part of our presentations, we have requested for liquidity infusion, one-time restructuring of loans, across the board six months extension of completion date by Rera, stamp duty reduction or waiver, moratorium extension on principal & interest for six months, and freezing of SMA classification for another year. We are hopeful that the government will consider our appeal and will make urgent interventions this time," Patodia, added.

Credai also felt that reducing cost of construction materials, implementing single window clearances for project approvals and work commencement, and allowing input tax credit for all sectors would help the sector immensely.

Continued and adequate policy support is critical for the revival of the sector. The real estate accounts for 6-7 per cent of GDP, is the second largest employer, and generates business generator over 270 ancillary industries in the country, it has added.