Deepak Parekh says real estate prices could drop by 20% after COVID-19, offers suggestions for survival
HDFC chairman Deepak Parekh on Tuesday said that the real estate price might fall by 20 per cent in the counrty post the COVID-19 crisis. According to CNBC TV18 Parekh has listed a set of suggestions to the state government, regulator Reserve Bank of India and developer community to help the real estate sector survive the financial and economic crisis.
Here is a list of suggestions he made:
For state government:
- There is a need for the incentivise migrant workers to return to work and to construction sites to resume work as soon as possible.
- Consider a waiver of stamp duty and registration charge on housing, at least for a limited time especially during the festive season of September-October.
- Allow a more staggered payment of charges like TDR, ULC, etc., as people are not in a financial position to make upfront payments.
- States need to review ready reckoner rates more frequently than what is currently done.
For Reserve Bank of India:
- Need early recognition from the regulator that monetary policy transmission is not happening effectively.
- Reserve Bank should directly purchase corporate bonds, commercial papers in the market to help with liquidity.
- RBI needs to act quickly as now is not the time for further financial accidents. Therefore, a one-time restructuring for the real estate sector is a more feasible solution that must be considered.
- Allow extended NPA recognition cycle of 180 days instead of 90 days, at least for a limited period of time.
For developer community:
- Developers must leverage and deepen their long-term relationship with bankers to guide them through these tough times.
- Assess the long-term strategy and capability, before availing of any moratoriums.
- Stay in touch with suppliers and remain watchful of commodity prices.
- Don't borrow short term for long term commitments.
- Take any available equity at whatever price because it will help the company in the long term.
- Focus on completion of projects, even at the cost of pushing new launches.
- This is the time for partnerships and for working with stronger companies. Example: partnering with good corporates and contractors with revenue sharing agreements.
- Raise the bar when it comes to corporate governance; it will help get community support.
- Take home less money/salary this year, and instead keep that money in the company instead.
