Work on in full swing only in about 10% of projects in MMR: Liases Foras
@hepzia
Mumbai: In spite of opening up of the construction sector and workers returning in droves back to Mumbai, work on the construction sector seems sluggish and is yet to take off.
“Work has resumed in only about 40 per cent of the total 4205 projects in the Mumbai Metropolitan Region (MMR). Within this 40 per cent of projects, work has resumed in full swing in only about 10 per cent of the projects,” Pankaj Kapoor, managing director of Liases Foras, a data analytics non-broking real estate firm told thenews21.com.
Kapoor argues that this slow pace of work has to do with the lack of liquidity in the construction sector due to the crashing of sales due to Covid pandemic, rather than the shortage of workers.
“Even if the workers were to return, how many builders could afford to get them back? To resume work, payments have to be made to contractors and cash flows are dependent on the progress of construction made. Cash flows are stressed with sales not taking place and outstandings from mortgages are not being disbursed,” says Kapoor.
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According to first-quarter results from April – June 2020 in the MMR region, Liases Foras found that sales have plummeted by 62 per cent in MMR in the first-quarter results as compared to the Q1 results of last year. The MMR region saw sales of just 6396 housing units in Q1 this year as compared to the 17,151 housing units sold in Q1 of 2019-20. This was despite 44 per cent of projects offering discounted schemes like cash discounts, GST and car parking waivers, gold coins, modular kitchens, air conditioners, television sets etc
Kapoor estimates that recovery of the real estate market could take about a year, though the turnaround could start as early as during the Diwali festive season. “It should take about 12-18 months to restore the confidence of the market. This is because the sales were not very healthy even before the pandemic started,” he says.
“Though the government did offer incentives on the supply side to builders, not many developers qualified to receive those benefits. It will take some measure on the supply sides from the government to restore the situation. Government hasn’t given any incentives to show the consumers, though the new tax regime did provide an exemption to those who invest in property. It could offer some incentives in stamp duty rates and in GST for consumers,” observes Kapoor.
Mumbai continues to have an unsold inventory of 29,1211 housing units, which is a 2 per cent drop compared to the Q1 results last year, due to fewer new launches this year. A price correction of Rs 11,659 per sq.ft in Q1 as compared to the prevailing pre-Covid rate of Rs 12,729 psft in the first quarter of 19-20, has failed to enthuse the slagging market due to huge jobs cuts and economic losses due to pandemic.
