Hard Hit Indian Builders Seek Support to Tide Over Covid Wave

People stand outside an unfinished residential apartment project in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Hard Hit Indian Builders Seek Support to Tide Over Covid Wave

Indian developers facing project delays, a rise in costs and eroding ability to repay loans needs the government’s support to survive as the second wave of the Covid-19 pandemic hits the realty sector harder than the first wave, according to an organization of the country’s builders.

The Confederation of Real Estate Developers’ Association of India has requested the nation’s government to come up with support measures for the segment including a cut in various taxes and restructuring of loans for a quicker bounce back of the sector, Harsh Vardhan Patodia, president of the organization said in an emailed statement. The majority of the developers are facing project delays due to labor shortage and delays in getting approvals even as a recent surge in prices of raw materials like steel and cement have contributed to a more than 10% increase in construction cost, according to a survey conducted by CREDAI.

A nascent recovery in the country’s property sector was derailed due to the second wave of the pandemic. Apartment sales across the top eight cities in India had surged in the three months to March 31 to the highest over the last twenty quarters, according to a note from credit rater ICRA Ltd.

Following the second wave that started in the country in late March, developers said most customers have postponed their purchase decisions. Various financial constraints and a liquidity crunch are further adding to the problem as builders face disruptions in planned collections from buyers, the survey showed.

“We have requested for liquidity infusion, one-time restructuring of loans, across the board six months extension of completion date by Real Estate Regulatory Authority Act, stamp duty reduction or waiver, moratorium extension on principal and interest for 6 months,” Patodia said in the statement.

©2021 Bloomberg L.P.

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