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Coronavirus impact: Lockdowns stall construction, homebuyers should brace for project delays

Realtors say delay in the projects, caused by the coronavirus outbreak, can be made good if grace period in the completion schedule is factored in.

Realtors say delay in the projects, caused by the coronavirus outbreak, can be made good if grace period in the completion schedule is factored in.

With most top cities announcing a lockdown till at least March 31 and construction activity almost coming to a standstill, homebuyers will have to brace themselves for another wave of delayed project deliveries, say real estate experts.

Out of these 15.62 lakh units under construction, nearly 57 percent or nearly 8.90 lakh units are in the Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) alone.

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MMR currently has the highest under-construction stock with nearly 4.65 lakh units – 30 percent of the overall under-construction stock across the top seven cities.

NCR is close behind, with 27 percent or over 4.25 lakh units in various stages of construction. All these units were launched between 2013 till 2019-end, as per data made available by Anarock Research.

Pune has close to 2.62 lakh units in various stages of construction, while Kolkata has more than 90,650 units under construction.

Among the three southern cities, Bengaluru has the maximum under-construction stock as on 2019-end with nearly 2.02 lakh units, followed by Hyderabad with nearly 64,250 units and Chennai with the least stock of nearly 54,200 units.

“Developers tend to schedule project launches during the auspicious festivals of Gudi Padwa, Akshaya Tritiya, Navratri and Ugadi. The strict advisories for complete lockdown across cities will impact housing sales during the upcoming festivals, usually considered auspicious by several homebuyers to buy homes,” said Prashant Thakur, Head-Research, Anarock Property Consultants.

"The delays due to coronavirus may extend to six months or more," said Pankaj Kapoor of Liases Foras.

Once the crisis is under control, the government will have to dole out various economic measures to bail out severely-hit sectors, reconsider its fiscal deficit targets and start spending.

That said, since this is a crisis with pan-India ramifications, all impacted projects will have to be excused from construction delay penalties under the respective state RERA, he said.

Realtors however, say that delay in the projects can be made good.

They say that there are over 30 lakh units currently under construction across the country with 10 lakh units in MMR alone.

“The delay in the speed of the work may be made good. Any delay running into 15-30-45 days can be taken care of if anybody puts that as grace period in the completion schedule,” said Nayan Shah, president, CREDAI MCHI.

“The most important thing is that consumer confidence must continue to make installment payments, the consumer’s purchasing power and with the disruption in the cash flow, the ability of the developer to continue with the project because he fundamentally needs money to continue and progress with the work, the support the government is likely to give in terms of construction finance, restructuring of finance, restructuring of EMIs and interest, restructuring of EMIs and home loans to the buyers," Shah said.

"We need to wait and watch and see how this all unfolds. If support is not given there may be a total collapse of the industry,” he added.

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First Published on Mar 24, 2020 03:02 pm
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