Deepak Parekh asks builders to compromise on prices.
Deepak Parekh has asked builders to compromise on the property pricing to sell-off unsold inventory to generate liquidity rather than going in for costly borrowings post the COVID crisis.
By Varun singh
HDFC Ltd Chairman, Deepak Parekh has urged real estate developers to compromise on the property pricing to sell-off unsold inventory to generate liquidity rather than going in for costly borrowings post the COVID crises.
Parekh was speaking at the Housing For All 2020 knowledge series webinar organized jointly by the real estate industry body NAREDCO and CREDAI.
Deepak Parekh stated that “a bit of compromise in the prices by developers will revive the real estate sector on demand stimulus in the next six months.
According to Deepak Parekh, the demand for commercial real estate would continue in the long run. “Post the lockdown scenario, it won’t be a situation where the entire work force would want to work from home, people would still need to meet others, so in the long run, the demand for commercial real estate will not evaporate,” he said.
Deepak Parekh also advised developers to abstain from borrowing heavily. “Borrowings are a double edge sword. While you can leverage and grow during good times, in bad times, it can finish off your business. So you need to know the perils of leveraging during such times,” he explained adding that it is better to get an equity cushion than going in for debt.
He also advised the developers to concentrate on completing the pending projects on time, rather than going in for new launches. “You can also get into joint arrangements with corporates to complete projects,” he said.
In his recommendation to the state government, Parekh mentioned that a waiver of stamp duty for a limited time period just before the festive season would help in reviving demand as well. “There is also a need to review the ready reckoner rates on a periodic basis. And also allow staggered payments on levies if you want the developers to come back. If this is not done, no one would be able to pay,” Deepak Parekh said.
To reduce NPAs he suggests a one- time loan restructuring and increase the working cycle to a 180 day from the present 90 days. Else this will result in a larger number of defaults and NPAs in the system.
The event was attended by more than 8,500 developer participants from all across the country with some of the biggest names like Dr. Niranjan Hiranandani, President, NAREDCO and ASSOCHAM, Satish Magar – President CREDAI, Rajan Bandelkar- President, NAREDCO West, Nayan Shah – President MCHI and other key developers as Irfan Razak of Prestige, J C Sharma of Shobha, Rajeev Talwar of DLF, R K Arora of Supertech and others participating in the webinar.
Dr. Niranjan Hiranandani, President, NAREDCO explained that though the Coronavirus pandemic seems to be like the most difficult time and a dark period for the real estate, it is not the case so. “We should use this as an opportunity to overcome these challenges and strengthen ourselves to emerge resilient in these testing times,” he said.
Rajan Bandelkar, President, NAREDCO West said that as suggested by Deepak Parekh, the time is really right for those wishing to invest in real estate at the moment. “Prices are really right at present and the interest rates are also low. People who have been waiting to invest won’t find a better time to do so,” he said.
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