New Delhi: The second wave of COVID-19 dealt a severe blow to India’s real estate sector with the industry seeking urgent relief for recovery.
According to the survey report by Confederation of Real Estate Developers’ Associations of India (CREDAI), over 95% developers feel inevitable project delays if no urgent relief measures are injected in the sector by the government and RBI. These delays are attributed to a range of factors, with 92% developers experiencing labor shortage at sites, 83% developers are working with less than half the workforce, and over 82% of developers are facing project approval delays.
CREDAI released findings of its first ever industry survey conducted across North, East, West and South zones between 24th May and 3rd June, 2021, to assess the impact of second wave of COVID-19 on real estate sector in India. Conducted with stratified sampling method, the exploratory survey witnessed a first-of-its-kind extensive participation of 4,813 developers from 217 cities, providing crucial insights on the industry sentiment and the range of challenges faced by the real estate sector.
A staggering 98% developers are facing reduced customer enquiries and 42% developers are experiencing a 75% decline in customer enquiries. Furthermore, the report reveals that the second wave has caused 95% of customers to postpone their purchase decisions.
The apex developers’ body also feels that reducing cost of construction materials, implementing single window clearances for project approvals and work commencement, and allowing input tax credit for all sectors will help the business.
CREDAI deems that continued and adequate policy support is critical for the revival of Indian economy, as the real estate sector accounts for 6–7% of GDP, is the second largest employer, and is a business generator for over 270 ancillary industries in the country.
“The real estate sector showed tremendous resilience in bouncing back on a cautious recovery path post the first wave, despite little relief measures. 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. The findings reveal that the second wave has had a more debilitating impact on the real estate sector than the first wave,” Harsh Vardhan Patodia, President, CREDAI National said.
“Added factors such as recent spike in construction materials including steel, cement etc have contributed to more than 10% increase in construction cost for more than 88% developers. Various financial constraints and liquidity crunch are further adding to the problem, with 77% developers experiencing issues in servicing of existing loans, 85% developers facing disruptions in planned collection, and 69% are facing issues in disbursement of customer home loans,” he added.