Government should also consider making the CLSS available to MIG.

Kushagr Ansal

- Director, Ansal Housing & President, CREDAI Haryana

Real estate sector has taken a severe hit in the last few years due to the various policy decisions taken by the government. The Covid pandemic seems to have worsened the situation. What are the peculiar challenges of the sector in Delhi-NCR particularly in terms of construction activities/ finance, etc.

The real estate sector needs a relief package similar to that given to the micro, small, and medium enterprise (MSMEs) sector by the central and state governments. A loan moratorium is expected, as well as a one-year extension of key approvals; the extension must take effect after the pandemic has passed. Staff at building sites should also be vaccinated with funds collected as a labor cess from investors, according to the state government. Vaccination at construction sites will help keep workers on the job and ensure project continuity; their migration during last year's lockdown delayed some projects, which only picked up steam toward the end of the year.

How has the challenge of rising pollution levels impacted the real estate development? What measures are being taken in that regards?

There will be a growing demand for second homes in less polluted areas that can provide owners with a break from the city's pollution. However, the number of Delhi-NCR residents who will leave their primary inner-city homes for the outskirts will be negligible in market terms for the next few years.

Various pollution-control measures are significant, but apart from the periodic construction ban, they have no bearing on the real estate market. Property prices in most parts of Delhi-NCR are currently at their lowest levels and are unlikely to continue to decline in the near future - definitely not as a result of rising pollution levels in the city. In most Indian cities, real estate prices are determined more by affordability and the ability to provide jobs than environmental factors. The primary demand factor for affordable and mid-segment housing is mobility, or how quickly residents can get to and from work.

Tell us about the rise in circle rates and how will that affect the sector in terms of demand and sales.

In these difficult times, we must look at states that are attempting to assist consumers in saving money. There are several states that have reduced stamp duty. Instead of raising the circle rate, the administration should consider that demand is high, implying that revenue would be strong. Increased circle rates, on the other hand, would drive buyers into the shell, affecting the revival. Despite rising raw material costs, the real estate market has kept prices low for years, with consumers constantly searching for price relief, which can only be achieved through a drop in circle rates and stamp duty.

There are a lot of stressed properties in Delhi-NCR with little appetite with most of the developers to takeover the projects which are either stuck in or under IBC.

It's time for the private players to step up. Realtors can team up with a private equity firm to form an Alternate Investment Fund (AIF) to receive essential assistance in managing assets, and the developer can assist in project identification, development monitoring, and inventory sales and marketing. Both will participate in fundraising events.

Raising, allocating, and maintaining the fund will not yield the desired results unless adequate processes are in place to track remaining construction, efficiently market it, and sell inventories. Such an initiative seems to be wise because it takes into account all of the stakeholders. The investor can make good money, the developer can make a profit, and the homebuyer can finally take possession.

An even-handed, homogeneous approach will not be needed for a problem like stressed real estate. Rather, infusing more liquidity into the market, incentivizing developer funding, and recapitalizing NBFCs and HFCs would necessitate a multi-layered strategy. For projects that are approaching completion and can be sold, easy credit options and need-based funding should be conceived.

Your take on the SWAMIH fund and how far has it helped developers. As a developer, are you looking at any such properties?

With NBFCs still experiencing liquidity constraints, the government should consider expanding SWAMIH to ensure that all stalled and stressed projects are completed as soon as possible. Banks and lending agencies will benefit from such programs, which will ensure that homebuyers get their dream homes. The government should also consider making the Credit Linked Subsidy Scheme (CLSS) available to MIG. When it comes to things like setup time and fundraising time, SWAMIH is possibly the quickest. Housing stagnation is a major issue that will need additional government assistance to resolve.

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