The real estate sector in Mumbai and its surrounding areas is unlikely to recover this year, according to builders, experts and homebuyers, as the industry battles its slowdown and an economy battered by the Covid-19 pandemic.
The problems are multi-fold: Construction sites wear a deserted look owing to around 60% of migrant workers still stuck in their home states with minimal ways to return, builders face acute monetary crises and buyers are uncertain when they would get possession of their homes.
Industry veteran Paras Gundecha, 67, who heads the Gundecha Group that has constructed more than 100 buildings in Mumbai (most of them in the western suburbs), said he had never seen such a long slowdown. “Things will start moving only after March and till then we have to bear the pain,” said Gundecha.
Niranjan Hiranandani, founder , Hiranandani group, which constructed townships in Thane and Powai, said banks should ease monetary crises faced by the sector. “The realty sector was suffering even before Covid-19 and hence, banks need to give us a a one-time rollover to tide over the crises,” said Hiranandani.
The shortage of labour is adversely affecting the entire construction sector in the Mumbai Metropolitan Region (MMR). According to CEDAI-MCHI (Maharashtra Chambers of Housing Industry), the leading association of builders, of the five lakh workers who had left for their home states in March-May, just two lakh managed to come back.
“Construction activity will remain majorly paralysed till we get sufficient labour back to the sites,” said Rajesh Prajapati, chairman, MCHI (media and PR).
CREDAI-MCHI has written to both the state and Central governments to start hundreds of trains to bring back migrant labourers.
“The labourers want to come back, but are unable due to lack of transport. Till new trains are introduced, the situation will not improve,” he added.
The MMR is a prime realty market in India. Liases Foras, the real-estate research firm, said in MMR, work has started in just 4,200 construction sites, of the 10,500 in total. “Even in these 4,200 sites, work is in full swing in just 420, while the other sites have minimal workers and hardly any work taking place,” said Pankaj Kapoor, managing director, Liases Foras.
The Builders Association of India (BAI) blames lack of liquidity for the problem. “Builders have exhausted all their money and are facing monetary crises. Banks and financial institutions are not supporting us. It is not possible to start work in such a situation,” said Anand Gupta, chairman, BAI (Housing and RERA committee). Potential buyers have deserted the market in the backdrop of the Covid-19 crisis. This can be illustrated by the massive drop in sales in both Mumbai as well as MMR during the Covid-19 period. In Mumbai, 1,611 apartments were sold from April to June, compared to 4,460 sold from January to March 2020. Similarly, in MMR, the period between April and June saw 6,396 transactions, compared to January-March where the number of sales clocked 16,794.
The state government, to boost sales, announced a cut in stamp duty prices from 5% to 2% till December 31 and to 3% till March 31. However, not many are convinced that this will help. “This is a very depressing market and such small steps will not get anyone to buy a house,” said Gulam Zia, executive director, Knight Frank, a real-estate consultancy firm. Zia puts the onus on the overall state of the economy. “Buyers facing job insecurity and pay cuts will not buy a house. The overall sentiment is negative,” he added.
Kapoor and Zia both said it will take at least one year going by the current state for the real estate sector to stabilise. “It depends on the Covid-19 vaccine, which may bring back confidence,” said Zia.
Even those who have booked apartments are still uncertain when they will get possession. The Maharashtra Real Estate Regulatory Authority (MahaRera) has extended the possession date by six months. “We were supposed to get possession in December, but it seems uncertain even in 2021,” said Veena Sehgal, who had booked a house at Kandivli. Lalbaug resident Ashwin Gala, who had finalised a house, had to cancel it. “Everything was finalised, but the pandemic struck and the seller bac-ked out. I had no option, but to cancel this deal,” said Gala.