Real Estate Welcomes FM’s Relief Package

The real estate sectore cheered the first set of relief measures announced by the Finance Minister and hoped that these initiatives will help bring tehe industry out of the red. <strong>Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani </strong>commented, “The bold econom

BY Realty Plus
Published - May 15, 2020 5:19 AM

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The real estate sectore cheered the first set of relief measures announced by the Finance Minister and hoped that these initiatives will help bring tehe industry out of the red. Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani commented, “The bold economic measures announced today display the government’s strong commitment to tackle the unprecedented challenges and restore confidence and faith in the economy. Providing an extension for completion of projects and treating the coronavirus outbreak as an event of ‘force majeure’ under RERA, brings a major relief for the sector. Reduction in interest rates on home loans will encourage fence-sitters to act quickly to invest in a property. Government measures towards improving liquidity and providing a boost to the MSME sector is also commendable. The resolution to remain self-reliant coupled with revolutionary reforms will surely lead the country on a high growth trajectory.” Sushil Mohta, Chairman, Merlin Group and President, Credai West Bengal said, "We are happy that finance minister Smt Nirmala Sitharaman has announced the imposition of Force Majeure Clause that will give real estate sector some breather to extend completion of the projects by another six months. Finance Minister has announced major sops for SME sectors. We are hopeful that the Finance Minister will announce some SOPs for the real estate industry and financial package for migrant workers in next few days. We appreciate the extended time for completion of project under RERA, by 3 to 6 months, some relief in payment of Provident Fund, TDS and statutory compliance and the additional fund flow available to NBFCs and housing finance companies, which will ultimately flow to MSME as well as housing projects. However, we expect to see reduction in interest rate as the banks are parking their funds at Sub – 4 repo rate, but interest charged to us for loan against rental income, as well as construction funding is 10 to 12%. In these times, while we are not getting rents from our tenants, the interest should be substantially reduced. Also, GST waiver, reduced stamp duty, reduced home loan rate could be a big incentive for people to buy homes, which will help to create a lot of jobs and support to 300 industries.” Bengaluru based J C Sharma, VC & MD, SOBHA Limited stated, “We welcome these laudable steps by the government towards the most crucial sectors that contribute significantly to the growth and employment of the economy. Further, the Ministry of Housing and Urban Affairs will advise States/UTs and their Regulatory Authorities to treat COVID-19 as an event of ‘Force Majeure’ under RERA. The regulatory authorities can extend this as required for 3 months and a fresh “Project Registration Certificate” can be issued with revised timelines. The extension for various statutory compliance under RERA will further aid in providing ease to developers and buyers. Additional support of one-year extension has been provided by the government for loans by NBFCs to commercial real estate sector from the date for commencement for commercial operations (DCCO) will spur the growth and de-stress the sector.” Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “To enhance liquidity support and to assuage risk concerns a further expansion of partial credit guarantee scheme for the NBFC/ HFCs has been provisioned. This will hopefully enthuse lenders to look at the sector favorably. On the lockdown related impact on labour shortage and construction delays, extension of registration and completion date of real estate projects under RERA by 6 months will provide some relief to the sector. We now await to hear the subsequent announcements that could resurrect demand and also boost Infrastructure sector, to make a complete assessment of the impact on the real estate sector.” Kolkata developer Manab Paul, Founder Sree Balaji said, “The most positive thing of this economic package is Government’s steps are broad in nature and long term positive outcome is expected out of this bold thinking. Direct support to MSME & under privilege segment is really appreciable. Overall business community along with the workers / service holder / contractor are expected to benefit. . Now if we consider the Real Estate & Infrastructure sector which is the most important sector in terms of generation of employment is likely to get huge support by these announcements. Bold step taken in RERA like six months extension and credit line support for NBFC & HFCS shall boost the Real Estate sector in coming months.” Dr. Joseph Thomas, Head of Research - Emkay Wealth Management shared, “The measures are more of supply side and there is very little that is on the demand side. Probably, the future announcements may contain a more balanced coverage of demand and supply side factors. Demand side factors generally tend to work faster as it is oriented towards the consuming unit directly.” Amit B Wadhwani- MD, Sai Estate Consultants Chembur Pvt Ltd ( SECCPL ) was of the view, that the announcement made about extension of registration and completion date of real estate projects registered under RERA was a positive move for the real estate sector as whole which has been distressed since the lockdown. “This gives some relief to ensure the completion of the pending projects. For the revival of the sector under several restrictions and to infuse liquidity, we look forward to more such steps as real estate sector is a significant contributor to the GDP. However, to kick-start the construction activities, we need labour support, and given the current situation that is what needs more attention. Apart from procuring of raw material and their increased prices, the labour crunch is going to be a potential crisis for the real estate industry to deal with shortly. With no timeline to the pandemic coming to an end, the return of labour will be something that cannot be ignored by the industry or by various sectors affected" Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd shared, “The Government has packed much punch in the “Atma Nirbhar Bharat” package, aimed at boosting Economy, Infrastructure, Technology, Demography and Demand. We also appreciate the attention to basics like land, labour, liquidity and law where key structural reforms are expected, paving the nation’s way to a global manufacturing power house. Specifically to real estate, we believe that the attempt to infuse more liquidity as well as to extend a helping hand to the struggling projects by relaxing RERA deadlines is very timely and appropriate.” According to Ravindra Sudhalkar, CEO at Reliance Home Finance, the Finance Ministry’s advise to States and UT to treat COVID-19 as an event of ‘Force Majeure’ under RERA will provide major relief to real estate developers whose projects have been stuck due to lack of liquidity and cash flow stoppages. The move to extend the registration and completion date by 6 months for all registered projects will provide more time to such developers to raise fresh financing or debt to complete their pending projects.”