Scope of SWAMIH fund has to be increased to ensure delivery of stalled projects.

Manoj Gaur

- CMD, Gaurs Group & Vice President - North, CREDAI National

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.

Though the sudden outbreak of the Corona virus pandemic has presented the real estate sector with unique and unimaginable challenges, the crisis has also paved the way for innovation and increased use of technology. The real estate market in Delhi NCR is steadily overcoming the obstacles, and the coming year will undoubtedly be better for the entire sector.

The challenges that the sector faces in Delhi-NCR are similar to those that the sector faces in other parts of the country. The factors that govern the real estate sector are the same everywhere, such as liquidity, the need for a loan moratorium, the necessity to extend delivery timelines due to COVID related delays, industry status to boost results, faster approvals to meet delivery deadlines, and so on.

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

Real estate is directly affected by pollution. When pollution levels exceed 'hazardous' levels, the National Green Tribunal (NGT) orders a construction moratorium for a few days, as seen in the Delhi NCR. Bans have an impact on delivery schedules, which has a cascading effect that causes project delays. Not only can pollution cause project delays, but it can also have a detrimental impact on a locality's property prices. When pollution levels become a factor in a homebuyer's decision, it's a foregone conclusion that they would favor areas with low pollution levels.

In contrast to conventional building activities that harm air quality, reputable developers employ construction firms that use best-in-class construction methods not harmful to the environment. The use of cutting-edge technologies such as precast and prefab would also reduce pollution.

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

We have seen a rise in sales volume has been aided by the optimistic sentiments seen across the country in the residential sector over the last six months. The increase in circle rate would undoubtedly dampen demand, steadily increasing since the fourth quarter of 2020. The demand may get affected as the increased stamp duty would be passed on to the homebuyers due to the upward revisions. Slashed stamp duty charges in Maharashtra have had a positive effect on the property markets of Mumbai and Pune, indicating that the state government's decisions had a direct impact on the sector. The government should be implementing policies such as stamp duty reductions to increase transactions and increase state revenue collections.

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.

Stuck housing projects have been an issue for a long time. In recent years, the government has announced funds to assist developers in finishing these projects and ensuring that customers receive their homes. In Delhi NCR, the Greater Noida Industrial Development Authority (GNIDA) announced its intention to take over stalled housing projects late last year. The Authority may choose a private partnership, joint venture, or ask any recognized firm to complete the projects and hand them over to the respective buyers after going through the bidding process and choosing a resolution strategy.

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

The project construction work, funded through SWAMIH, has picked up significantly, and seven phases of additional projects are scheduled to be delivered across the country in the second half of this year. Unlike in the past, when developers timed construction to match sales velocity, the goal is to finish construction as quickly as possible. The task is huge as the country has around 4.58 lakh stalled projects, and the scope of the fund has to be increased to ensure delivery of these units.

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