Spread of coronavirus has become an impediment to all economic activities and the country’s economy is almost on the brink of destruction. Common man’s savings is slowly vanishing as there is no source of income presently.
Real estate sector too is on a standstill. All construction activities, registration procedures, allotment of houses are halted. Flow of cash is drastically decreasing. In such a situation, real estate sector has decided to reduce the prices of finished houses by 20% to attract customers and revive the flow of cash in this sector.
Prices of finished houses can be reduced by up to 20 percent due to the Corona crisis. HDFC Chairman Deepak Parekh said that to tackle the problem of cash money, housing development companies have suggested to sell the finished houses at the earliest. Meanwhile, various real estate organizations have sought permission from the government to start construction activities with conditions of physical distance. They have also demanded a relief package from the government to deal with the cash problem. However, organizations have also accepted and welcomed the lockdown till 3rd May.
Priority is flow of cash right now not profit
Deepak Parekh has also suggested to the developers not to get in the way of making too much profit as it would affect their business in the long run. During a video conference with representatives of the real estate sector, he said, “I believe that real estate prices should come down by 20 percent and it will come. According to the estimate of NAREDCO, the price fall will be between 10 and 15 percent, while I believe that we should be ready to bring down the prices by 20 percent”.
He said that the price of flats already ready will also come down, but the developers are sitting without selling them later waiting for the price to increase. Parekh said, “Compromise, compromise and compromise, we have to compromise. The burden of unsold flats has to be reduced, no matter the cost. We need cash”. He predicted that it would take at least six months to improve demand in the real estate sector.
Real estate expectations from PM
Meanwhile National Chairman of the real estate sector organization CREDAI from Delhi, Zakshya Shah said in a statement, “We are with Prime Minister Narendra Modi’s decision to extend the period of lockdown. We await the government’s plan after 20 April where some relief to certain sectors is possible. We have also urged the government to allow limited construction activities. This will help give a boost to the real estate sector”.
Sector facing the challenge of cash
He said that the housing sector is currently facing a cash challenge. In view of the extension of lockdown, the Reserve Bank should issue an economic relief package for this. Ashish R., Managing Director of Puravankara Limited, one of the largest real estate developer in India said that “increasing lockdown is a priority for the health and safety of the countrymen. It will take some time for industry sectors to adjust to the situation after the lockdown is lifted. We look forward to the guidelines that will be issued on 20th april”.
Real estate sector stands in solidarity with the government’s decision of lockdown
Dhruv Aggarwal, group CEO of Housing.com, Makan.com and PropTiger.com, said, “The risk of spreading the corona virus still remains high. In such a situation, the government’s decision to increase the lockdown is right”. Mahagun Group Director Dheeraj Jain said that he firmly stands with this decision of the Prime Minister. However the government should take some steps to help the real estate sector. Deepak Kapoor, director of Gulshan Homage, said that to deal with the cash problem of developers, banks should do a one-time restructuring of their loans.