prpri Useful strategies for surviving impact of COVID-19 for real estate sector Useful strategies for surviving impact of COVID-19 for real estate sector

Suggestive strategies

When working life gets resumed after COVID-19 lockdown, it is highly expected that the pricing and rates of real estate inventory will come down. To cope up with this situation, here are some of my recommendations:

1. In case of ready inventory, since there will be financial crunch, the target of developers should be to sell the inventory at earliest. Even if they have to sell it at certain reduced price. Less profit is better than question on survival in this hard time.

2. Many people are of the opinion that real estate will not be making sales or at least not making big transactions. However, it would be a very good opportunity for those who have job security (along with savings & bank loan) to use this opportunity to buy at reduced price. (ex- IT professionals in Jobs, Doctors & Medical staff at hospitals, and others having fixed pay). Thus, it is recommended to target such people.

3. In case of developers, involved in more than one project, it would be advisable to focus presently on sales of project having ready inventory.

4. If no ready inventory is there with the developer, then only those projects should be focussed on which are near completion for sale. New projects & projects having long time near completion should be delayed.

5. In these times, developers must think about user market rather than investor market, because major transactions will probably be done by users. The developers may come up with additional attraction for buyers. (ex- reduced amenities maintenance charges for say 6 months, etc.)

Hits on Real Estate Sector

6. In real estate market of Madhya Pradesh, it is still prominent thought that people desire to live in owned houses as compared to flats. (“the thought of having owned land and owned roof), so for developer colonizer, a suggestion that, the plot buyers (user group) may not be able to get house constructed on their own but definitely they will be willing to buy, if they gey house. So, the colonizer me also provide them with facility of making house (atleast in affordable plot segment) or connect them with their trusted contractors. Ensure that for these times, comfort and satisfaction of user buyer is met.

7. Additional brokerage can also prove to be an assistance in generating sales. Remember, the target should be to offload the inventory even by making compromising to survive this tough time.

8. In cases where the sale/booking is made on goodwill of developer and on just launching of map of the project (such sale/booking amount is used to complete the project), it is very much possible that developers will face liquidity crunch, as the booking after COVID-19 may reduce to a great extend. So, in such cases, financial partnership can be resorted to, which can help in timely completion and sales of the project.

(Important suggestion: this would be highly advisable to make such partnership transparent in terms of financial involvement, responsibilities and division of units)

9. Observe closely and be very vigilant for the expenses of the project including for prices of materials used in project and very carefully leverage any such opportunity.

10. Moratorium benefit, which banks have come up with in COVID-19 times has a cost associated with it. Think of other strategies before opting for moratorium. Also, in case of opting moratorium, plan strategy for post moratorium period.

11. Last but not the least, always try to avoid legal battles   and find solutions across the table rather than engaging your time, effort, energy and money in long lasting legal battles.

Always remember :

Real Estate developers have always fought with the difficult business circumstances and have made a way to come out, it will happen this time too it will happen.

Disclaimer: Contents contained herein are opinion/advice of author and are for knowledge sharing only and do not constitute any legal advice. In case this material is received by error, please notify immediately and delete the same. Although the electronic transmission is believed to be free of any virus or other defect that might affect any electronic system / device in which it is received, it is responsibility of recipient to ensure that it is virus/defect free and no responsibility for any loss or damage arising in any way from its use will lie on sender


Author Bio

Qualification: CA in Practice
Location: INDORE, Madhya Pradesh, IN
Member Since: 18 Apr 2020 | Total Posts: 1

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August 2021