The central government needs to offer 1% GST to reduce the transaction cost.

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory

What are the key continuing challenges which you foresee impacting the real estate sector post easing out of lockdown?

The biggest challenge we foresee for the economy are issues on the supply side, with a lot many businesses never coming back. We also see survival issues for businesses that are excessively leveraged over the next four quarters. So far as real estate is concerned, we are seeing good suppressed demand (demand that could not be realised as a result of the lockdown) in the market, especially from fence-sitters in regions like MMR. The stamp duty cut in Maharashtra has led to a sudden and unexpected spurt in demand across asset classes in the Mumbai Metropolitan Region. We believe that the rate cut in the region has propelled a lot of people to close their purchase currently, what remains to be seen is the flow of demand post March 2021. We expect a slight lull in demand, as well as pressure on the supply side over the next few quarters with developers wanting to focus on completing existing projects and postponing new project launches.

Are there any green shoots visible after the announcement of the stimulus packages?

The RBI's announcement of reduction in rates has most definitely helped bring down the cost of borrowing for the homebuyer. We expect banks to pass on a little more of the RBI's rate cut benefit over the next 6 months. Going forward, we expect India's next leg of growth coming from consumption and private investment. Currently, it is the government spending that is taking the lead but eventually we expect India to follow the west with respect to the cost of lending. The reduced cost of lending will spur growth across the country and especially in sectors like automobiles and real estate. If you look at the registration data over the past couple of months, you will realise that there has literally been a V-shaped recovery in the category lead by the state of Maharashtra.

What further measures / reforms should be undertaken by the states / central government?

Honestly, the state government of Maharashtra has done its bit and led by example so far as real estate is concerned. The reduction in Stamp duty charges for a temporary period has helped the category immensely. We expect the government to extend the temporary reduction for another 6 months post March 2021. Separately, the central government needs to offer 1% GST to drastically reduce the transaction cost. Overall, there is a need for the government to look at avenues that could help leave more money in the hands of the consumer to ease the demand side pressures.The government has addressed supply side concerns to help expand capacity and propel private investment by reducing the corporate tax, by reducing the cost of borrowing, etc. It is now time, especially as a result of the repeated lockdowns and its impact on the economy, to focus on the demand side.

What are your views on shortage of labourer's issues?

The government needs to put together a charter of migrant labourers across the country. The same could help the government pass benefits to them when need be. Separately, real estate needs to be provided with requisite impetus in terms of incentives for hiring beyond a certain threshold. The same could be concessions in tax, concession in epf payments on behalf of employees, etc.

Brief us on your outlook for the next couple years in the realty segment.

Real estate, in years to follow, will see a significant increase in consolidation. We will also witness the industry focusing on affordable housing for the next 4-5 years, both because of the incentives rolled out by the government and the consumer demand for it. We see the market for high-end developments struggling in metro cities, until and unless sustained incentives are offered. In the MMR region we see challenges for the high-end luxury home segment post March 2021 once the stamp duty cut ceases to exist.

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