What can the Developers do to Create Liquidity and Sustain?

The sector needs to prepare itself for times to come writes Rohit Poddar.

The impact of the novel Coronavirus on Indian real estate has been unprecedented to an extent that it has brought construction activities to a halt and significantly eroded the market of its potential buyer-base. The real challenge here is to keep the business operational till the pandemic passes and there are several ways to do that. 

Contingency Plan and Timely Execution

The pandemic has made everyone realize the value of time and timely execution of things that are essential. Developers today need to ensure that work undertaken under these challenging times should be executed and completed within the given timeframe as no one knows what tomorrow will bring. The sector needs to prepare itself for times to come, for example; during lockdown the first and foremost demand was to allow construction as rainy season was to arrive soon and the preventive measures for rainy season were not even initiated. Hence to avoid such conditions again, sectors need to prepare itself for better tomorrow.

Optimizing Spends

The suo motto of anyone during these times is 'Save More, Spend Less and Invest Smartly'. The sector should also action this motto to ensure optimum liquidity for worse times. Developers should invest after a thorough analysis of ROI and only invest in things which are most necessary for the project or sales. It is time for developers to conserve the capital to stay afloat. Although there are several challenges that the sector is facing currently, but it has also provided the opportunity to build bonds with consumer using digital mediums.

Going Digital

In last few months real estate has progressed digitally as the overall consumer behaviour has changed significantly and people now prefer auctioning things online. Technology adoption can prove to be beneficial for revival of the sector. The pandemic has forced the government to look at alternatives for minimizing the risk posed to the economy and technology rose to tackle this challenge. PropTech, digital construction, precast technology, 3D printing, prefabricated technology are all innovations that can be leveraged to derive growth and prosperity for the sector in the 'new normal'.  The government has launched the initiative 'Digital India' but this needs to work in tandem with policies designed to facilitate technology exchange. Developers who promote the use of technology should also be given attractive subsidies or tax exemptions. The facility to register sale agreements of properties by Maharashtra government will also help developers to help in uplift the fall in real estate.

Liquidity Challenges

Lack of liquidity is a huge challenge for developers. Lowering of income tax can act as a boost to the sector as it will lead to reduction of financial burden on the buyers and increase their disposable income. The government can also look at a one-time roll over of credit limit along with 50 per cent reduction in GST rates to bolster developers. The liquidity crunch being faced by the sector can be alleviated by the release of tax refunds, pending with the government. The abolition of stamp duty or its incorporation under GST will also aid the sector towards this end.

The involvement of institutional players will help in evolving business models to be more structured and gain further momentum in real estate sector. Affordability will still remain the key parameter and the support from government will help in the revival. The completion of existing projects and handover to the existing buyers shall be the catalyst in restoring the confidence in the housing sector.

Ever since the moratorium announcement, people who have secured income / savings are looking at investing it smartly to build asset that would help them in such challenging times. Owning a house has always been a dream for everyone in India and with this pandemic the rates have fallen to their lowest which makes it the right time to invest.

Hits: 134