After three years of business disruptions caused by demonetization, implementation of GST and the realty law RERA, and the NBFC crisis, the market had started stabilizing. But all hopes were thwarted as the COVID-19 global pandemic hit India, forcing the government to impose a national lockdown from March 25 last year to curb the spread of the deadly disease.
Instead of recovery and growth, 2020 brought more pain and distress in the realty sector, shaving off 40-50% of business in the residential segment from an already low base.
Jeevesh Sabharwal, managing director of Shivam Group, shares his company’s game plan to tackle the crisis.
How far the pandemic will prolong the recovery in the residential real estate?Jeevesh Sabharwal: It all depends on how long this pandemic will last. And like I said earlier also, in the long run, only companies with a strong balance sheet, good governance and a good brand will have a positive impact because it will be the survival of the fittest.
What do you think about recent measures announced by the Reserve Bank of India?Jeevesh Sabharwal: The government needs to create an environment that is compelling for buyers to buy. This will bring in the much-needed liquidity that the markets are looking for.
What is Indian Real Estate industry wishlist?Jeevesh Sabharwal: We want the government to create the right sentiments for people to buy their home. As the real estate sector supports around 250 other ancillary industries, the government should consider increasing tax sops on the purchase of residential units that would help create a ripple effect on the overall economy. Following the Maharashtra model, other states should cut stamp duty to create a win-win situation for all stakeholders. Maharashtra has demonstrated that the move benefited buyers as well as developers. And interestingly, the revenue of the state exchequer swelled as well.
With NBFCs still facing a liquidity crunch, the government can look at the possibility of creating more schemes like the Rs 25,000-crore Special Window for Affordable and Mid-Income Housing (SWAMIH) to ensure expeditious completion of all stalled and stressed projects. Such schemes would help unlock funds for banks and lending institutions and ensure that homebuyers get possession of their dream homes.
The government should also consider extending the Credit Linked Subsidy Scheme
The government should also consider extending the Credit Linked Subsidy Scheme (CLSS) for middle-income group (MIG), under which an upfront interest subsidy of up to Rs. 2.7 lakh is provided to first-time homebuyers beyond March 31, 2021.
What is the way ahead for Indian Real Estate industry?Jeevesh Sabharwal: How the budget pans out for the real estate sector, only time will tell, but one thing is for sure, strong fundamentals are vital for the revival of housing demand. The pace of revival can quicken, provided the government extends a helping hand and injects enough stimulus to boost the sector and the overall economy. However, one needs to be cautiously optimistic with the pandemic still a cause for concern.
What do you expect from the government for the sector?|Jeevesh Sabharwal: We want the government to create the right sentiments for people to buy their home. In its bid to help the real estate sector survive this unprecedented health crisis, the Centre did announce various measures. These included invoking the ‘Force Majeure’ clause under the RERA to extend project completion deadlines by 6-9 months, the extension of interest subsidy for the middle-income group, and relaxing tax rules to allow sales of homes valued up to Rs 2 crore at a 20% discount to circle rate. Industry players welcomed these steps, but the sector needed many more interventions on the demand side for meaningful growth.
Are you using any digital channels complete your sales?Jeevesh Sabharwal: Shivam group is among the first real estate companies to go digital in marketing our projects. Customers continue to enquire and are waiting for the lockdown to end because real estate is a touch and feel product, and most people would want to see what they are buying before they pay. Transactions will happen online, but physical visits to apartments will continue to happen for a long time to come. These are early days, but the response so far has been tremendous, and this is here to stay.
Do you believe sales should actually be picking up?Jeevesh Sabharwal: People surely want to get comfortable homes for themselves to stay. This is the yardstick, sales should actually be picking up. I also believe because of the financial stress most developers are going through, there will be a huge supply constraint, which in turn will help maintain the prices or may even push up the prices of ready-to-move flats.
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