The first national developer survey by an industry body to analyse the after-effects of the pandemic’s deadly second wave further paints a grim picture for the country’s second-largest employment generating sector.
After a decent recovery in housing sales during the last two quarters of FY21, the momentum seems to be ebbing, as a nationwide survey of real estate developers by industry association Credai reveals that 95% customers have postponed their purchase decision due to the second and more virulent wave of Covid infection.
The first national developer survey by an industry body to analyse the after-effects of the pandemic’s deadly second wave further paints a grim picture for the country’s second-largest employment generating sector. About 90% of the developers feel the impact of second wave on their business is far more intense than the earlier wave.
Over 95% developers participating in the survey felt that there will be project delays if urgent relief measures are not injected. The delays are attributed to several factors —92% developers experiencing labour shortages at sites and 83% developers getting by with less than half the workforce. Also, more than 82% developers said they are facing project approval delays.
The survey findings also shed light on changing consumer behaviour, with a staggering 98% developers saying they are facing reduced customer enquiries and 42% developers experiencing a 75% decline in customer interest. This is besides the fact that 95% of customers are postponing their plans of owning a house at present.
The survey was conducted from May 24 to June 3 and included 4,813 developers from 217 cities across India.
“Real estate 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. The findings reveal that the second wave has had a more debilitating impact on the real estate sector than the first wave,” Credai national president Harsh Vardhan Patodia said.
Industry also pointed out that construction costs have increased by more than 10% for 88% developers participating in the survey. Sharp increase in cost of construction material is a major concern, especially for cement, steel, aluminium, copper, PVC and plastic.
Another worrisome development is that the survey revealed that 77% of the developers who availed project finance are facing issues of servicing the existing loan, while collections are not coming as planned for 85% developers. Besides, 69% developers said they are facing issues in sanction and/or disbursement of customer home loans.
More than two-thirds of the developers who participated in the survey said stamp duty waiver will help in demand creation, whereas the same number feels that input tax credit on GST and others will improve financial viability of projects. Also, 66% developers suggested that loan restructuring will help in alleviating financial constraints.
Credai has urged the government 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 and interest for six months, and freezing of SMA classification for another year, Patodia said.