The second wave of covid-19 and the various lockdown restrictions have led to project delays, deferred home-buying decisions, reduced customer enquiries and deepened financial constraints.
About 95% developers fear inevitable project delays if no urgent relief measures are offered to the sector, according to a survey by Confederation of Real Estate Developers’ Associations of India (CREDAI). These delays are attributed to a range of factors, with 92% developers experiencing labour shortage at project sites, 83% working with less than half the workforce and over 82% of builders facing project approval delays.
Credai surveyed 4813 developers across north, east, west and south zones between 24 May and 3 June, to assess the impact of the second wave of covid-19 on the real estate sector in India.
“The real estate sector showed tremendous resilience in bouncing back on a cautious recovery path post the first wave, despite little relief measures. 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,” said Harsh Vardhan Patodia, president, Credai National.
The recent spike in construction materials including steel, cement among others has contributed to over 10% rise in construction cost for more than 88% developers. Various financial constraints and liquidity crunch are also adding to the problem. Majority of developers are experiencing issues in servicing of existing loans, disruptions in the planned collection, and the disbursement of customer home loans, the industry body said.
The survey also indicates changing consumer behaviour that has resulted in slowing of demand due to a decrease in enquires and site visits.
Nearly 98% developers are facing reduced customer enquiries. Furthermore, the report reveals that the second wave has caused 95% of customers to postpone their purchase decisions.
“We have made a representation to the government requesting to infuse urgent financial stimulus and initiate quick progressive measures to assist recovery. We have requested for liquidity infusion, one-time restructuring of loans, across the board 6 months extension of completion date by RERA, stamp duty reduction or waiver, moratorium extension on principal and interest for six months, and freezing of SMA classification for another year,” Patodia added.
The developers’ body also thinks that reducing the cost of construction materials, implementing single-window clearances for project approvals and work commencement, and allowing an input tax credit for all sectors will help the real estate sector.