A real estate developers’ body with over 1,800 members in Mumbai and Mumbai Metropolitan Region (MMR) has claimed that as many as 374 projects have been completed since the imposition of the lockdown following the outbreak of COVID-19 and sales have increased by 15 to 20 percent over last year.
“After navigating through the initial lockdown phase of the pandemic, CREDAI MCHI members have been able to complete close to 375 projects across Mumbai, Thane, Raigad, Palghar and other Mumbai suburbs,” CREDAI MCHI president Deepak Goradia told Moneycontrol.
These are all RERA-registered projects and mostly those that were nearing completion before the lockdown was imposed. “Most developers are keen to finish the project and receive the occupancy certificate so as to ensure that buyers do not have to pay GST on completed projects,” he says.
With regard to sales, Goradia said that the momentum has increased by 15 percent to 20 percent in the last few months and is likely to continue going forward too.
“This is on account of offers, stamp duty rate cuts, interest rate cuts and buyers keen to graduate from the uber/rental lifestyle to a home of their own during the pandemic. The sales momentum is likely to continue even after December 31 when the stamp duty cut will increase by 1 percent,” he said.
“Developers through their different schemes will be able to accommodate that 1 percent additional stamp duty as well,” he said.
In order to boost the stagnant real-estate market hit by COVID-19, the Maharashtra government on August 26 decided to temporarily reduce stamp duty on housing units from 5 percent to 2 percent until December 31, 2020. Stamp duty from January 1, 2021, until March 31, 2021, will be 3 percent.
Goradia also said the initial demand was restricted to ready-to-move in properties in the mid-size and affordable segments but new launches have been witnessing traction for the last few months.
“We are hoping that demand would percolate to other segments of residential as well in the next few months,” he said.
As for the biggest challenge faced by the real estate sector – labour force, Goradia said that labourers have been trickling in since July and right now 70 to 90 percent of construction sites have been mobilised.
“Construction activity has revived with protocols in place. We have about 70 to 90 percent labour on all our construction sites and the activity is likely to pick up going forward,” he said.
However, the labour cost has increased by 15 percent as there is demand from the infrastructure sector, especially for government projects, due to which developers have to shell out Rs 900 per labour instead of Rs 700 earlier.
“Labourers who have returned from their villages are few in number due which costs have risen by 15 to 20 percent. We also have to match the price paid to them by firms engaged in the construction of government projects,” he said.
Having said that, this additional cost has not been transferred to the buyers as it is buyers’ market,” he added.
As for challenges that plague the real estate sector, Goradia said that there are still some issues that remain to be addressed. These include consent of the existing lender in case of the developer applying for last-mile funding under the Swamih fund. “This is not at all forthcoming,” he said.
“We have also demanded for restructuring of loans,” he said, adding input tax credit for GST is also the need of the hour.
Having said that, we are expecting the government to approve the reduction in premium on additional floor space index soon to boost the real estate market. “The announcement is expected shortly,” he said, adding that another big challenge that remains is that of prospective buyers being unable to reach the construction site as local transportation is an issue.
“It (public transport) has not resumed fully,” he said.
In an effort to bring credible developers and genuine homebuyers at one platform, CREDAI-MCHI has also partnered with banking giant State Bank of India, as well as Google and BookMyShow, for the first virtual edition of India’s largest Real-Estate Expo to be scheduled between December 4 and December 13, 2020. The virtual event is expected to see participation from over 100 developers in the MMR region and 5 lakh homebuyers.