Though a Force Majeure event, the Coronavirus crisis has hit the under-construction real estate projects and the labourer’s community alike, across the country. Kolkata, the capital city and a real estate hotspot of West Bengal, is also severely affected, with property sales almost coming to a standstill.
The outbreak of Coronavirus has severely hit the business sentiment and brought all economic activities to a grinding halt across the world, not sparing India. So is the case with the coastal State of West Bengal. The property sales have virtually stopped in Kolkata, enquiries are at a minimum, and there is no question of site visits amid the national lockdown. Though the Central Government had rolled out several measures to deal with the crisis, the industry bodies such as Confederation of Real Estate Developers Association of India (CREDAI) are demanding more supportive announcements for the severely hit real estate industry.
How badly is the market affected in Kolkata?
In a scenario where every sector of the economy has experienced a shock, the real estate sector could not remain immune to the ill effects of the global pandemic. Property enquiries are minimal, and site visits have stopped. Apart from office and home sales, the lockdown has also affected the rent payment from the tenants.
In Kolkata, there are more than 700 under construction projects at different stages of development. Naturally, the delays in construction have also pushed the delivery timelines ahead by 2-3 quarters. Several developers who had plans to launch new projects around the Bengali new year have deferred all the announcements until the next festive season.
Major developers with under-construction projects are the Merlin group, Riya Manbhari, Tata housing, Atri group, Eden group, GM group, among others.
The popular localities with the maximum number of under-construction projects are New Town, Rajarhat, E M Bypass, Tollygunge, Madhyamgram, Joka, Howrah, Alipore, New Alipore, Garia, Saltlake and Sealdah etc.
Source: 99acres.com listings (April 2020)
How has the Coronavirus crisis impacted the migrant workforce?
West Bengal, which provides employment to the maximum number of construction workers (3.1 mn) after Uttar Pradesh, is facing hardships due to heavy reliance on migrant workers from Jharkhand, Bihar, Chhattisgarh and Odisha. Due to the COVID-19 crisis, the migrant construction workers have left for their homes, leaving the construction sites in limbo.
Due to the socio-economic conditions of the migrant workforce, they are more prone to diseases. On one side, the halting of construction has delayed the project’s delivery; it has also created a crisis of sustenance in front of construction and allied workers.
Expressing his opinion over the pandemic, Amit Kumar Valecha, a construction consultant and owner of GT and Company, says, “The COVID-19 crisis has virtually stopped everything related to the construction industry. When the national lockdown in force, no projects are allowed to proceed with the activities. However, if we look from the humanitarian point of view, it is a bigger crisis for construction and allied industry workers. They are entirely dependent on government measures to deal with the crisis. We hope that as the conditions get better, the industry will pick up the pace again.”
Although the Central Government has taken several measures to deal with the Coronavirus induced slowdown, CREDAI has requested the Government for additional measures for the real estate sector to deal with the unprecedented situation.
The CREDAI has requested the Government to defer the payments of Goods and Services Tax (GST), and Income Tax Payment by 180 days. It has also sought a waiver on the interest, and the penalties for delayed payment of the taxes for the current financial year.
Though the Reserve Bank of India (RBI) has already urged the banking institution across the country to provide a three-month moratorium on all kind of loan Equated Monthly Installments (EMIs), the CREDAI has urged the Government to provide a moratorium of at least six months for overdue loan payments.
The real estate representative body has also urged the Securities and Exchanges Board of India (SEBI) to not treat the delays in debt servicing pertaining to the capital markets as defaults.
For dealing with the crisis, the Central Government has also urged the States to utilise Rs 31,000 crore collected from builders and developers as ‘Building and Other Construction Workers’ (BOCW) cess for the welfare of construction workers.
Conclusively, the business sentiment is severely jolted by the unprecedented COVID-19 pandemic. Though the measures employed by the Central Government such as postponement of key compliances filing dates and special package for construction workers, it would do well to take up the measures on a case by case basis (like in case of West Bengal). Continuous efforts to check the spread of the virus in communities and welfare of the migrant workforce must be the way forward.