Opinions

CREDAI members in Karnataka will not increase property prices for the next 3 months


In the wake of Covid-19, economies worldwide have been disrupted including real estate. Builders are faced with a number of challenges including shortage of labour and increasing construction costs says
Kishore Jain – President, CREDAI Bengaluru. He spoke to
Sobia Khan of ET about the challenges ahead and the measures required to revive the sector. Excerpts…


What is the impact of Covid-19 on Indian real estate, both in terms of sales and launches?


The COVID-19 pandemic and subsequent lockdowns have put our lives and livelihoods on hold. Currently, there have been no new launches since the outbreak of Covid-19 in India. The inter-relation between supply chains, migration of labourers, cost overruns, and liquidity constraints have created significant challenges for the sector. Most of us have paused our launches for a quarter or so. As far as sales are concerned, CREDAI members have witnessed a decent demand from serious homebuyers in the last 3 months.

Recently Union Commerce and Industry Minister Piyush Goyal said that real estate developers should “reduce rates”, “get rid” of inventory and not be stubborn about holding onto prices. What is your reaction to this?
In my opinion, Mr. Goyal’s statement seemed targeted more at the Mumbai market, which has always been one of the most expensive markets in India. The South Indian markets have historically been substantially user-driven markets, and not speculative in nature. This has ensured a balance of supply and demand. Moreover, the increase in prices has been consistent with no sudden spikes. Therefore, such measures would not work for us here.

How are rising input costs and labour shortage affecting the construction industry?

Our biggest challenge currently is the rising cost of construction materials – both cement and steel prices have gone up significantly. Cement cartels have hiked prices by a whopping 50-60%, making it extremely challenging for us to hold on to the current prices, let alone drop them. On top of that, since 60-70% of our workers have gone back home, work is stalled and resuming very slowly, thus delaying deadlines and further increasing our overall costs. RERA has given us a 6-month extension on deadlines but that alone is not going to be enough.


When do you expect some green shoots in the revival of property sales?


There has been a decent demand for residential real estate through the Covid-19 outbreak and the ensuing lockdown. These circumstances just filtered the serious homebuyers further. They have also taken advantage of home loan interest rates currently being at an all-time low to make the investment. We are also in talks with the Government to reduce the GST. Housing interest being reduced is the main catalyst to revive our industry. No matter the short-term economic strife, over long enough periods of time, real estate investments are bound to appreciate due to the simple fact that land is limited.





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