NEW DELHI: Around 90 per cent of real estate developers feel that the second wave of the COVID-19 has been more "devastating" on their business than the first one, as new sales and collections have fallen drastically since April this year, as per a survey by realtors' body Credai.
Most of the developers (95 per cent) fear project delays because of the localised lockdowns across states.
The association, which has around 13,000 members in various states, released a survey of its 4,813 members from 217 cities.
The survey was conducted across North, East, West and South zones between May 24 and June 3 to assess the impact of the second wave of COVID-19 on the real estate sector.
Labour shortage, financial constraints, approval delays, increased construction costs, and weakening customer demand are key challenges highlighted by the developers.
"90 per cent of developers feel that the second wave is more devastating on the business than the first," Credai President Harsh Vardhan Patodia told reporters in a virtual press conference.
According to the survey, there has been a slowdown in housing demand due to a decrease in enquiries and site visits.
95 per cent of builders pointed out that customers have postponed their purchase decisions due to the second wave.
A staggering 98 per cent of developers are facing reduced customer enquiries and 42 per cent experiencing a 75 per cent decline in customer enquiries.
On the supply side, the survey found out that over 95 per cent of developers expect inevitable project delays if no urgent relief measures are injected into the sector by the government and Reserve Bank of India.
Credai said 92 per cent of developers are experiencing labour shortage at sites, 83 per cent of builders are working with less than half the workforce, and over 82 per cent are facing project approval delays.
"The real estate sector showed tremendous resilience in bouncing back on a cautious recovery path post the first wave, despite little relief measures."
"However, the second wave has prompted us to reflect and re-evaluate the growth path of the industry. The findings reveal that the second wave has had a more debilitating impact on the real estate sector than the first wave," Patodia said.
Credai also pointed out that recent spike in construction materials -- including steel and cement -- have contributed to a more than 10 per cent increase in construction cost for more than 88 per cent of developers.
The report pointed out that most of the builders are facing financial constraints and liquidity crunch, with 77 per cent experiencing issues in servicing of existing loans, 85 per cent developers facing disruptions in the planned collection, and 69 per cent having issues in the disbursement of customer home loans.
The association said that the impact analysis report will be shared with the concerned ministries and all relevant stakeholders.
"We have made a representation to the government citing the current survey and requesting the government to infuse urgent financial stimulus and initiate quick progressive measures to assist recovery," Patodia said.
To bail out the sector, he said Credai has sought liquidity infusion, one-time restructuring of loans, across the board 6 months extension of completion date by RERA, stamp duty reduction or waiver, moratorium extension on principal and interest for 6 months, and freezing of SMA classification for another year.
"We are hopeful that the government will consider our appeal and will make urgent interventions this time," Patodia said.
Credai also demanded a reduction in the cost of construction materials, single-window clearances for project approvals and work commencement, and allowing the input tax credit for all sectors will help the business.
The association said that adequate policy support is critical for the revival of the real estate sector, which accounts for 6-7 per cent of the GDP, and is the second-largest employer.
Established in 1999, Confederation of Real Estate Developers' Association of India (Credai) is the apex body for private real estate developers in India, representing over 13,000 developers through 21 states and 217 city chapters across the country.