Market is not improving in a hurry, things are seriously stressed and your best bet is to sell, he said.
Coming down heavily on the real estate sector, union minister of commerce and industry Piyush Goyal has warned that the market will not recover in a hurry and that their best bet is to sell at realistic prices.
“If any of you here feels that government will be able to finance in such a way that you can hold longer and wait for the market to improve, market is not improving in a hurry. Things are seriously stressed and your best bet is to sell,” Goyal said at a webinar organised by NAREDCO.
“You have to complete your projects before you sell because buyers will not buy under-construction projects. In my life, I wouldn’t buy an under-construction flat from anybody. Tons and tons of builders have taken customers for a ride. You will have to complete your projects, bring partners, get investors. But unless you complete your construction, sell at realistic prices, there is no other choice,” he said.
"Those who have sold should leverage less and get rid of bank loans and survive the downturn. Those who are saddled with loans and holding on to prices have suffered," he said.
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He said that the government is trying to see whether we can bring in some concessions in the ready reckoner rates. “But if that does not happen, you have to sell the inventory. Unless you reduce your rates, you will be stuck with inventory," he said.
"You can be stuck with inventory and default or get rid of whatever you quoted at high prices. Consider it a bad decision and move ahead," he said.
Others who participated in the webinar held on June 3 were office bearers and members of NAREDCO, including Niranjan Hiranandani, Rajan Bandelkar and R K Arora, president, Naredco-UP and chairman Supertech Group.
HDFC Chairman Deepak Parekh on April 14 had advised real estate developers to offload their unsold inventories at ‘whatever price’ as they require liquidity at this juncture, especially at a time when the sector is grappling with the novel coronavirus, or COVID-19, pandemic.
“How do we unwind from this crisis. For starters, the price of real estate has to come down and will come down. NAREDCO has estimated between 10 percent to 15 percent. I have said somewhere that one must be prepared even for 20 percent. For those potential future homebuyers who have got job security or cash flows, this will be an excellent buying opportunity as prices come down,” he said at a video conference organised by real estate developers associations- NAREDCO and CREDAI.
“Be willing to offload inventory at whatever price. Take hits in some projects. Get rid of inventory,” he had told the developer community.
In his speech, Parekh had advised developers to abstain from borrowing heavily. “Borrowings are a double edge sword. While you can leverage and grow during good times, in bad times it can finish off your business,” he explained, adding that it is better to get an equity cushion rather than going in for debt.
He also advised the developers to concentrate on completing the pending projects on time, rather than going in for new launches. “You can also get into joint arrangements with corporates to complete projects,” he had said.
In his recommendation to the state government, Parekh mentioned that a waiver of stamp duty for a limited time period just before the festive season would help in reviving demand as well.
There is also a need to review the ready reckoner rates on a periodic basis. And also allow staggered payments on levies if you want the developers to come back. If this is not done, no one would be able to pay,” he had said.He also advised the developer community to get into joint development agreements, development management agreements. “Get into these arrangements. Work in partnership. Don’t do everything yourself,” he had said.