Private sector must step in to address the country's strained RE challenges.

Mohit Goel

-  CEO, Omaxe

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.

Delhi NCR is facing the same problems as developers in other metros are facing. Due to the lockdown-type situation, the sentiments are getting affected. The government has to come out with packages that can take care of the unlikely situation similar to the last year. However, the sector needs an extension of project completion deadlines on an immediate basis. Nonetheless, the positives that have emerged from the 2020 crisis will serve as the foundation for the real estate sector's development in the coming months. The demand for larger homes within an accessible, hygienic, and green complex with amenities such as healthcare, daily necessities, and everyday rejuvenation within walking distance would drive demand.

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

It is reasonable to believe that extreme air pollution has an impact on a region's overall real estate market. However, this is not the case; in India, the effect of pollution on property demand is almost non-existent. Pollution levels in Delhi-NCR rise sharply as winter approaches, which coincides with agricultural stubble burning in neighboring states. A year-round 'high warning' may have more drastic consequences for real estate, but this is a seasonal phenomenon. Cities are incredibly adaptable when given time to rest.

Delhi is the country's capital and the center of government, political influence, and massive economic activity. The creation of vast employment opportunities by key government agencies and large companies drives real estate demand. Most areas of the NCR continue to see multi-fold real estate acquisitions, particularly from multinational corporations that are considered environmentally conscious.

Integrated townships on well-connected outskirts are gaining popularity and importance. People can increasingly opt to reside in such developments; nevertheless, demand for homes in congested city centers that provide the quickest access to workplace hubs will remain unchanged.

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

Increases in circle rates are unjustifiable in light of other states' stamp duty reductions. The developer community has been requesting a reduction in circle rates for quite some time to restore investor confidence; circle rates are already high, and a rise will be detrimental to the real estate sector.

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.

The government is contributing. In 2019, a Rs 25,000 crore package was announced. Despite being a proactive move, the government-backed fund controlled by SBICAP would fall short in light of the crises' magnitude. Furthermore, the fund is limited to affordable or mid-income projects, leaving a significant inventory of unsold units outside of its purview. The private sector must step in to address the country's strained real estate challenges. To close the funding gap, funds from other private sources, such as PE companies, NBFCs, Venture Capital firms, HNIs, and institutional investors, must be channelled. Apart from financing, it is critical that all major stakeholders, such as investors, developers, contractors, and consulting firms, work together to complete, market, and sell the project.

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

In the last three years, the real estate sector has been undergoing a difficult period. Demand and supply have been established for many years, and given the limited supply, even the stuck projects would benefit from schemes like the SWAMIH fund. SWAMIH is a social impact fund working to complete the construction of stalled homes at a rapid pace to provide relief to homeowners. Around 159 projects with a total investment of Rs 145 billion have been approved, resulting in the completion of approximately 100,000 homes. Around 47 projects have achieved final approval, but 112 are in the early stages of approval, awaiting due diligence.

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