Economic Survey 2021 points out to V-shaped recovery; Support Measures Needed by Govt to keep up the momentum
There has been a strong recovery in the Indian real estate market, especially in the affordable housing segment, after the lockdown has been eased. The real estate sector, displaying exemplary resilience, has recorded 150 percent jump in housing prices in the July-Sep quarter of 2020 as compared to the immediately preceding quarter, according to the Economic Survey 2021.
“During the quarter July 2020 to September 2020, transactions for HPI@Assessment Prices have increased by around 150 per cent on Q-o-Q basis, thus, it is observed that sales have retrieved in affordable segments, reflecting economic recovery in the real estate sector,” said the Economic Survey presented by the Union Finance Minister Niramal Sitharaman. The National Housing Bank’s House Price Indices (HPI) measures movement in prices of residential properties.
The NHB prepares two kinds of indices- HPI@Assessment Prices and HPI@ Market Prices - Under Construction Properties. “Total number of transactions for HPI@Assessment Price reduced by 71 percent from March-June 2020 on Q-o-Q basis while on YoY basis transactions reduced by 67 percent from June 2019 to June 2020” said the Survey. Thus, it can be inferred that the pandemic and lockdown did impact the real estate industry quite significantly but the sector has bounced back smartly.
“The government has done a spectacular job in easing the lockdown at the right time. With a calibrated approach, the construction and infrastructure industries have done well and poised for better show in the months to come. The government now needs to give infrastructure status to the real estate also to bring in required FDI and help the industry to blossom properly,” said Ankit Kansal, Founder and MD, 360 Realtors.
The last few months of 2020 have seen laborers come back to project sites and there is fair progress in the infrastructure projects too. “Now the government needs to keep up the momentum by launching some path breaking initiatives and ably support the growth of the important infrastructure sector in the country. Adequate focus has to be given to tourism infrastructure sector also. The Tourism industry, which was the worst affected in the pandemic, has tremendous employment generation scope.” said Aditya Chamaria, Managing Director, Damodar Ropeways & Infra Ltd.
Immediately after the lockdown was eased, some important decisions were taken by the government like granting extension in deadline of the real estate projects.
The Ministry of Housing and Urban Affairs had asked the state RERA authorities to treat COVID-19 situation as ‘Force Majeure’. The Minister asked the state authorities to extend registration and completion dates suo-moto by six months of all registered projects expiring on or after 25 March 2020. It also said that state regulatory authorities can extend this by further months if needed.
“The step was extremely important and came in at the right time. It was done to ease the problem of shortage of labour which had gone to their native cities and towns. Now the government can address the problem by focusing on housing for the laborers in major cities by providing land at cheaper prices and doing away with taxes on all the raw material for houses for the laborers,” said Dhiraj Jain, Director, Mahagun Group.
The real estate sector has been suffering from many years now and the corona pandemic has made the matter worse. “Now is the ideal time for the government to bring in sops and support the industry which employs about 1 crore people and contributes about 7 percent of the economy. The anomalies refraining Input tax Credit can be put to rest by the government which is causing a lot of suffering to the developers,” said Abhishek Bansal, Executive Director, Pacific Group.
The Indian economy showed humungous resilience and bounced back smartly after a sharp contraction of 23.9 percent in the first quarter of the current fiscal. (FY21). The next quarter saw a contraction of just 7.7 percent, according to the Economic Survey 2021. The growth in next fiscal (FY21-22) is projected to be a massive 11 percent, far more than what most other economies will see. “The momentum in recovery is strong and the government can do a lot to keep up the trajectory of growth, while the private sector is chipping in. The government can focus more on infrastructure which will have a multiplier effect on many sectors including the real estate sector,” said Amit Modi, Director, ABA Corp & President (Elect), CREDAI Western UP.
Real estate is an important sector of the economy and it is likely to employ about 1.7-1.8 crore people by 2025.
"The retail and entertainment segment of the real estate sector has been hit hard and continues to face pressures owing to pandemic. The government must support the retail and entertainment industry such as malls and multiplexes by easing the lockdown SOP’s further. Also we expect some relief in taxation for the Multiplex and Restaurant operators. The industry has a potential to jump in completed space to 8 billion square feet in 2025 from around 3.6 billion square feet in 2013", said Uddhav Poddar, MD, Bhumika Group. The industry has a potential to jump in completed space to 8 billion square feet in 2025 from around 3.6 billion square feet in 2013.
The real estate sector has been hit hard by the pandemic. Although there is recovery now, the government must lend a helping hand to the developers across the country. One of the long standing demands of the industry has been to enlarge the price bracket of affordable homes so that more home buyers can take advantage of the tax confessions available to houses costing up Rs45 lakh as of now. The government should take care as soon as possible, said Arfeen Ahmed, Director, Homekey.
Now the industry is keeping its fingers crossed in hope for some relief/support measures in the upcoming budget.