Reviving real estate post COVID-19
- Aug 11, 2020 | Divita S Gupta
India’s real estate demand has been at an all time low since the overnight cash ban and implementation of the housing law that protected buyers against fraud in November 2016. The ongoing economic slump was aggravated by cash flow and liquidity issues both for consumers as well as people involved in the business of real estate. Adding fuel to this fire was the outbreak of the novel Coronavirus that temporarily shut shop for construction companies, real estate consultants, housing finance companies and fundamentally anyone involved in the business of real estate.
Now that India is starting to relax the lockdown restrictions, the real estate vertical, just like any other industry is going to look at reviving themselves. Is this possible? If so, what probable reform measures could help the Indian real estate industry survive as well as revive post lockdown?
Complete stalled projects
One of the most significant takeaways from the Covid-19 crisis has been the need to own a home. Renters realised the importance of having the security of their own home while non resident Indians whose livelihoods were suddenly under threat discovered the importance of having a safe haven back in their motherland. The demand for homes is going to rise and to meet this demand, the real estate industry needs to work on completing projects that were stalled due to the lockdown.
Building a digital cosmos
Because the lockdown restrictions are not entirely relaxed and construction sites are known hot zones for bacteria and viruses especially during the upcoming monsoon season, the real estate industry will need to invest in building a digital cosmos with an end to end journey to facilitate consumer purchase. Right from viewing of real estate spaces, relationship management, assisting with finance, payments and finally signing of the dotted line - nearly everything will need to be moved to the digital space. A rewards and recognition program promoted by Central or State Governments could help real estate businesses jump in on this digital bandwagon.
Government waivers and relief measures
Certain waivers, if albeit, for a short period could go a long way in helping revive India’s real estate industry. Waivers on stamp duty alone could help stalled projects take off once again. Other than a stamp duty waiver, waivers on processing fees from finance companies or waiver of prepayment penalties, advanced tax benefits on home loans could have more consumers actively looking at making a real estate purchase.
Can GST be brought in the picture?
While a GST rate cut would be welcomed by the real estate industry, the 40th GST council didn’t really announce anything with reference to rate cuts. So as an alternative, if the GST paid on inputs in construction of commercial property is allowed to be paid as credit for GST charged on rentals, it could provide huge relief to the real estate industry.
Post lockdown, the real estate industry will stand an opportunity to get back on its feet, only time will tell whether they latch onto this silver lining, survive as well as revive during this time of economic crisis.