Supertech Has Opined That Realty Prices Will Go Up In Near Future

There might be liquidity issues in the near future as there have been no sales and collection in the last two months, says Chairman RK Arora.

Construction activity has once again resumed in phases. What are some of the precautions that are being taken? Also, what is the focus currently on? Is it mainly on completing existing projects?

Yes, after the lockdown, we resumed construction at our projects in the NCR. We have placed around 4,500 labourers on the site with the proper SOP given by the MHA. We are taking care of social distancing and have proper masking and sanitisation in place. We have also made one isolation room at the site to take care of any eventuality. Parallely, we have trained our employees and workers and put one Covid marshal who looks after all the compliances.

What is the situation currently like on the ground?

Due to the lockdown situation, the labourers moved to their native place. The construction material supply chain is also getting affected because all borders are sealed and the materials are not coming in time. This will have a delay of around six to eight months to complete the projects. Parallely because there are no sales and no collection since the last two months, in near future, this will have a liquidity issue in the projects. So we have asked the government to give some relief package to the real estate industry; one from the state and another one from the centre because a lot of projects are getting financed from the banks; adjusting that is going on. We have asked them to one-time rollover or restructure existing loans as well as additional funding of minimum 20% to rollover the project for the next one year because we need to pay the labourers and the employees. Since the collection will have a problem, we have asked these things from the RBI and a similar pattern was permitted in 2008. During the economic slowdown, they had permitted the one-time rollover to the existing debt.

Secondly, we have told our issues to the state government because we are working with the project in the state; the lockdown issues like waiver of stamp duty and the issues that are pending with the authorities, which are land-related issues. So we asked them to waive off all these issues.

Real estate of course has taken a very big pounding. There has been a complete hold to construction activity. So what is the situation and how does it stand across the sector?

The construction activities are moving slowly now and we have started the project with a slow pace and with the existing manpower and we have been taking care of them since the last two months. We are hoping to increase the manpower in the near future as soon as the lockdown and the pandemic situation is over.

There are reports of a steep price hike by a lot of the cement players and steel players. Have you approached anyone to discuss this sort of cartelisation? Have you also felt the impact of an increased price pinch?

Suddenly the cement and steel prices have gone up 50% because of the cartelisation and we have given the complaint to the ministry of housing to look into these issues seriously because it will have an effect on the project.

Is high inventory for you a pain point given the expected low demand? Do you think we could see an impact on pricing?

I do not think so. Prices in the real estate are the lowest as on date. Since the raw material prices are going up and the supply is also slow, I do not think the price will come down. I hope in the near future, prices will increase because of the slow production, slow construction and slow delivery. So in the near future I expect a price increase.

(Source: Economic Times)