The real estate sector, one of the largest employer of labourers and a significant contributor to the GDP, has taken a serious hit since the lockdown came into effect. With the sector trying to restart under several curbs and restrictions, a slew of measures might be important to reignite it. To deal with the slew of problems, the sector has been demanding rebates in GST and stamp duty.
As work in the real estate sector resumes, procurement of raw material and their increased prices, lack of labour, along with a severe liquidity crunch are some of the main problems being faced, says Prateek Mittal, Executive Director of Sushma Group. “In tier-two cities, construction cost is the majority component of the cost of an apartment, unlike metropolitans where land is the biggest component”, he adds.
A preferable solution he says, can come as “rebates in GST and stamp duty to reduce the burden of the buyers and also allowing 90 per cent home loan financing to homes up to 75 lakhs.”
Quoting a ‘fear psychosis’ in labourers and the need for them to be provided with basic necessities as opposed to the norm earlier, a GBP group spokesperson says, “Not just now, but even post Covid-19, the sector will face problem of labour shortage. The shortage will mar the sector even if the labourers are given facilities. It is a grave situation for real estate.”
Kushagr Ansal, Director Ansal Housing and President, Confederation of Real Estate Developers’ Associations of India (CREDAI) Haryana points out the need for the government to make sure real estate is affordable to all, saying, “The government has been promoting housing for all and for it to become a reality, it is important to ease the cost burden on real estate by controlling the cost of construction. There should be some decision on cost effective materials for housing, especially the one being developed under affordable housing. Last year commercial did well and residential took a backseat but in the coming few years these two segments are expected to perform equally well.”
Meanwhile, Pradeep Aggarwal, Chairman Associated Chambers of Commerce and Industry of India (ASSOCHAM) assessing the existing issues said, “Severe problems in real estate, especially liquidity crunch exists, as some fly by night operators and even some known developers went too far in expansion without taking care of the present work. Loans were taken from banks and diverted to other projects. The realtors in the market now have several commitments to fulfil. They should not be left hanging to suffer the brunt of the pandemic alone.”
As for the labourers in the Tricity, Pradeep says, “Taking care of labour at the sites is one main reason they did not leave. The incentive is much more for us as it is because of their decision to stay that we were able to start activity as soon as the government permitted us.”
As for the future of real estate, all developers have a positive outlook. “Real estate is an important part of overall development of economy and lifestyle of people. If real estate suffers several activities will come to a halt. The residential segment takes care of the housing needs of citizens which cannot be handled completely by the government. This means that the future of real estate is good as there will always be a demand. With the increase in population and growing economy, the sector will keep on getting chances of good business”, adds Pradeep.