Nine In 10 Builders Expect Project Delays Amid Covid-19 Second Wave
As many as nine in 10 builders in India expect further delays to their projects as the second wave of the Covid-19 pandemic has impacted business more severely than the first.
That’s according to a report released by the Confederation of Real Estate Developers’ Association of India, which surveyed 4,813 real estate developers from 217 cities across the country to understand the second wave’s impact on the sector.
Around 95% of developers expect the delays to be inevitable if the government and the Reserve Bank of India don’t undertake urgent relief measures for the sector, the report said. The delays occur in various forms: Nearly 92% of companies surveyed face worker shortage at sites, 83% are working with less than half the workforce, and over 82% of firms are encountering project approval delays.
“The real estate sector showed tremendous resilience in bouncing back on a cautious recovery path post the first wave, despite little relief measures,” Harsh Vardhan Patodia, president of Credai National, was quoted as saying in a statement. “However, the second wave has prompted us to reflect and re-evaluate the growth path of the industry, and we felt it was vital to assess the challenges faced by the customers and industry partners in light of the recent developments.
Builders have been reeling from the pandemic even as top cities showed a pick-up prior to the second wave, largely due to incentives offered to buyers. Even ahead of the pandemic, the sector was laid low over the last few years by disruptions like the RERA legislation and a funding crunch after the IL&FS group went belly-up.
- Construction cost has increased by more than 10% for as many as 88% of builders.
- About 77% of the companies that have availed project financing are facing difficulties over servicing their existing loan.
- Collections aren’t coming as planned f or 85% of developers.
- Nearly 98% of developers are facing reduced customer enquires and walk-ins.
- Around 42% of developers are facing a drop of more than 75% in customer enquiries and walk-ins.
- Nearly 95% of customers delayed their purchase amid the second wave.
- As many as 69% of builders are facing troubles in sanction or disbursement of customer home loans.
We have made a representation to the government citing the current survey and requesting them to infuse urgent financial stimulus and initiate quick progressive measures to assist recovery, Patodia said.
“As a part of our presentations, we have requested for liquidity infusion, one-time restructuring of loans, across the board six-month extension of completion date by RERA, stamp duty reduction or waiver, moratorium extension on principal & interest for 6 months, and freezing of SMA (special mention accounts) classification for another year,” he said.