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With the average citizen restricting expenditure and saving for the rainy day, the real estate sector that involves the biggest fund commitment in any average household has been hit hard during the pandemic. The housing sector has been so severely impacted that customer enquiries and booking is down by more than 95%, a study by real estate body Confederation of Real Estate Developers’ Associations of India (CREDAI) revealed on June 10.

The pandemic has stalled as many as 95% of real estate projects in the country and over the past one year input costs have risen by 10% over the last one year, said Harsh Vardhan Patodia, national president, CREDAI India.

Earlier real estate aggregators and consultants such as 99acres, housing.com and Knight Frank have indicated the crippling effect of the mobility restrictions and economic slowdown on the real estate sector of the country.

Sales stalled

The study indicated that more than 92% of the developers faced shortages of labour since April, 2021 when the second wave of the killer virus peaked, and 93% of the developers are working with only 50% workforce.

The survey found slowing demand due to decrease in enquires and site visits by probable customers. A staggering 98% developers are facing reduced customer enquiries. As many as 42% of the developers said they experienced a 75% decline in customer enquiries.

This also affected completion schedules and delaying project handovers. The study said 95% of the total projects are getting delayed.

Also, the shortage of staff at government and municipality offices is affecting projects that require administrative clearances and approvals and the study said 82% of the projects are facing this trouble.

CREDAI members said purchase of 95% of the properties is getting delayed, which means only 5 persons out of 100 is still buying real estate on their own schedules.

This halt in cash flow has had a telling impact on project completion and 90% of the developers feel that the drying up of cash flow is worse compared to that in the first wave in 2020.

As many as 91% of the CREDAI members felt that the business environment is not conducive and would take at least 7-8 months to revive, if not more.

Finance issue

The situation is quite adverse on finance-related issues whether it concerns home loan processing or stamp duties said the real estate body.

According to the study, 77% of the developers who have taken project loans are facing multiple issues as payments from customers are not flowing in.

As many as 78% of the developers felt that stamp duty reduction or waiver would help in creating demand. As many as 75% developers said input tax credit on GST would help improve financial viability of projects.

About 66% developers felt restructuring of loans would help them in tiding over financial difficulties. The sharp rise in increase in the prices of construction materials such as cement, steel, bricks, paint is a major concern for the developers.

CREDAI has urged the Centre for input tax credit on GST relaxation or some relief packages including loan restructuring offers as were offered in the first wave last year.

Study method

CREDAI has done the study across the country with as many as 13,000 developers engaged in the process. The total number of responses numbered 4,813.

The study was conducted between May 24 and June 3, 2021.

Zonewise, the number of responses were – North zone (143), East zone (269), South zone (1,050), West zone (2,294) and central zone (1,057).

CREDAI has collected 851 responses from Tier-I, 2,195 from Tier-II and 1,767 from Tier-III cities of the country.

The survey put 12 questions and each question has 4 options.