Kolkata: Shutdown may delay real estate projects by a year

TNN | Updated: Apr 8, 2020, 11:53 IST

Representative image

KOLKATA: Those who had booked apartments and were hoping to move in after the lockdown ends, be prepared for a long wait and pray the builder does not go bankrupt. Leading developers say the lockdown will lead to projects being delayed by a year.
A prolonged lockdown could even push a section of builders against the wall. Covid-19 has stalled the construction of around 40,000 units that were to be delivered between now and 2023.
Speaking to TOI, Confederation of Real Estate Developers Association of India (Credai) Kolkata chapter president Nandu Belani said the Covid-19 outbreak would result in at least six months delay for projects beyond the lockdown period as men and material would have to be mobilized afresh.
“The Covid-19 lockdown has disrupted all timelines. All activity in the real estate sector was suspended when the lockdown came into force. Most of the workers have returned home. Manufacturing of materials has been suspended and supply is on hold. To get everything restarted will take at least three months. But that will happen only if this situation is resolved next month. But if the situation persists for a while, workers will only return after the monsoon. And that means a setback till at least September,” said Belani.
Sushil Mohta, who is president of Credai’s apex body in West Bengal, warns the recovery could be a long and painful one unless the industry receives support from by the Centre and the state.
“The supply chain of goods and materials required will take months to restore. Our cash flows from new sales and collection from the sold units have been severely affected. Licence fees/rentals from tenants in retail malls and office complexes have taken a hit after the lockdown. If the lockdown continues for a long period, around 20-25% developers will be in deep distress with some even facing liquidation,” he warned.
Mohta has written to Union FM Nirmala Sitharaman, demanding a slew of incentives to prevent companies from going bankrupt and triggering a crisis that would leave home buyers in the lurch.
Belani has also appealed for revision of circle rates so that developers can sell the inventory at attractive prices soon after the lockdown is lifted.
Sales at prices lower than circle rates currently attract penalty on buyers and developers by way of higher stamp duty and I-T as the difference between the two rates is deemed as personal income on the part of both buyers and developers. Global real estate services firm JLL pegged the unsold inventory in Kolkata at 29,555 units worth Rs 15,300 crore.
“Customers and tenants have stopped payments. Developers are starved of funds. They will have no option but offer deep discounts to sell commercial, residential or undeveloped land to generate funds. We expect the government to understand the situation and help,” Mohta added.