The outbreak of coronavirus disease has impacted the real estate sector, which was already reeling from the demand slowdown, the road, transport and highways minister said while addressing a webinar organised by realtors' body NAREDCO.
Union Minister Nitin Gadkari on Wednesday exhorted real estate players to sell unsold housing units even at no-profit-no-loss to boost their liquidity condition and save interest cost on loans.
The outbreak of coronavirus disease has impacted the real estate sector, which was already reeling from the demand slowdown, the road, transport and highways minister said while addressing a webinar organised by realtors’ body NAREDCO.
Promising his full support, Gadkari, who also holds the MSME portfolio, advised builders to send their representatives to ministries of housing and finance as well as the Prime Minister’s Office (PMO) to suggest ways to deal with the present crisis.
To tide over the crisis caused by COVID-19 and create housing demand, the senior minister offered a slew of suggestions to builders, ranging from business expansion in rural areas to diversification in road construction to setting up of their own housing finance companies.
Citing an example from the automobile industry where many manufacturers are having their own finance companies, Gadkari said real estate companies could consider establishing their own housing finance companies to give loans to customers at lower rates and not be fully dependent on banks.
He said there is a need to strengthen non-banking finance companies (NBFCs) through equity infusion from the government and private players.
The NBFCs should tap funds from international markets where interest rates are lower. The minister pitched for lower interest rates on home loans with a longer tenure so that the customers’ equated monthly installments (EMIs) remain less.
On builders sitting on huge unsold housing inventories, Gadkari advised builders, “Don’t be greedy. You will not get a premium price. Whatever price you are getting, sell your properties to boost liquidity and move forward.” He said there are many builders in Mumbai who are not clearing their unsold stocks and rather they are waiting for prices to increase to Rs 35,000-40,000 per sq ft.
“They are committing mistakes. Interest cost to banks, financial institutions and private lenders are increasing,” the minister said.
The developers should negotiate prices with prospective customers and even sell at “no-profit-no-loss” to avoid huge interest costs, Gadkari said.
Stating that there are huge opportunities in his ministries, he asked developers to diversify into logistic parks and road construction where precast technologies were being used.
Gadkari said his ministry is developing bus depots, petrol pumps, hotels, restaurants and rail over-bridges along the highways where real estate companies could participate.
The plan is also to develop townships along Mumbai-Delhi corridor, he informed. Gadkari also told builders to expand their businesses in small towns and villages with affordable housing projects below Rs 10 lakh and not only focus on big cities.
NAREDCO National President Niranjan Hiranandani said the real estate sector has been struggling for the last few years because of instability created by reforms like demonetisation, GST and the real estate regulatory law RERA.
“Now, with this outbreak of coronavirus, the work has come to a grinding halt,” he said and sought a stimulus package from the government to deal with this crisis.