The Indian real estate contributes about 8% to the Gross Domestic Product (GDP) of the country.
This was before the COVID-19 pandemic but things may not be the same for the economy if migrant laborers – the foot soldiers of the real estate sector – witness mass disruptions.
There’s a need for builders and developers in Hyderabad to minimize the COVID -19 effect on their ongoing and future projects by adopting a humanitarian approach. This is possible when the sector goes out of its way to make migrant laborers feel reassured with financial, health, and emotional security through confidence-boosting measures.
With the center relaxing lockdown allowing migrant laborers to travel, the real estate builders in Hyderabad will be hit hard if there’s a reverse exodus to villages. States like Bihar, UP, West Bengal and Assam provide the bulk of migrant laborers to construction hubs.
Equally, the workplaces at the construction sites need to gear up to meet all social distance and hygiene measures.
The real estate sector would find itself in a catch-22 situation if the COVID-19 situation improves, but migrant laborers who left already do not return to the cities. Such a scenario calls for out-of-the-box policy measures & incentives to woo them back.
This can include linking the flagship Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with the construction sector, allowing them to receive dual payments from government as well as the private construction industry.
The COVID-19 may likely disrupt the plans of builders and developers in Hyderabad when it comes to launching new commercial and residential projects in the immediate future. Thus, a business continuity plan (BCP) must focus on offloading existing inventory with some bargain for the buyers to overcome liquidity crunch.
The statutory protection available to real estate stakeholders including buyers under the Real Estate Regulation Act (RERA) needs a relook post the COVID-19 extended lockdown.
The statutory compliances including project completion due dates and registration validities for all RERA projects in Hyderabad may have to be extended for builders & developers for a duration ranging between 3 to 6 months. Reason: If not, they might get tangled in consumer cases & may pay up penalties.
That the Goa RERA has already done this by extending all statutory compliances by three months, is a case in point.
In fact, RERA allows an extension of project completion dates under section 6 on grounds of "force majeure".
Unless real estate friendly COVID-19 policy measures like relief in tax deductions to real estate stakeholders, low housing loan interest, and subsidies are offered, the real estate builders in Hyderabad may find it tough to attract low and middle-level buyers.
In such a scenario, the premium segment will hold the key to drive the business for real estate players. Hence, the focus may be shifted to this segment for quite some time.
No one exactly knows how long the COVID-19 impact will last as social distance and precautionary hygiene measures are likely to stay as the new normal. Work from home (WFH) driven economy will push the real estate sector to adopt a 360-degree digital alignment connecting all stakeholders.
From a virtual tour of the project site, home banking, loan arrangements, documentation to the property registration process, the digital alignment will be the new norm. It will call for seamless digital integration of services offered by bankers, buyers, developers, builders, and government regulatory authorities.
By: Prabeer Sikdar