Moments after the Finance Minister laid out details of the first instalment of the Rs 20 lakh crore economic package announced by Prime Minister Narendra offering loan guarantees to MSMEs and much-needed support to the real state sector among others, the realty experts welcomed the move. Along with MSMEs liquidity and loan announcement, FM also announced major relief for real estate sector and contractors, terming it a step to boost growth and move forward towards a self-reliant India.
FM Nirmala Sitharaman on Wednesday announced that all real estate projects that were to be completed on or after March 25, will get a six-month extension and real estate regulator (RERA) will be further allowed to give three months extension considering local challenges. Government's move comes on the back of the several projects getting delayed due to the COVID-19 lockdown with construction work coming to s standstill,
Real Estate experts welcome govt's move
“In continuation of policy initiatives to infuse more liquidity in Financing Companies, there is a new window for borrowing up to Rs 30, 000 crores by NBFCs/HFCs/ MFIs which will be guaranteed by the government and further Rs 45,000 crores under partial guarantee scheme will infuse credit to Real Estate Sector. Consistently, the government and RBI have been taking significant steps to solve liquidity issues of financing companies and Real Estate. Further, an extension of RERA timelines beyond lockdown period by six months will be a relief to developers who are not defaulting on project completion timelines” said Piyush Gupta, MD, Capital Markets (India), Colliers International
“One of the most astute stimulus package series-1 has been announced by our finance minister which is not only fiscally responsible but also specifically aims to connect the weaker dots in the economy. This is to quicken India’s revival as soon as the lockdown eases. Although late, the government indeed came out with a superior proposition as compared to developed countries when seen in terms of specific targeting and effectiveness thereof”.
Anuj Puri, Chairman, ANAROCK Property Consultants: “Today’s announcement is much in line with the government’s aim to spur economic growth and build a ‘self-reliant’ India. In the first of the series of announcements the FM will make over the next few days, the real estate sector, NBFCS/HFCs and MSMEs got a major boost on day one. Providing major relief to real estate developers, the government has extended the timeline for project completions and registration by 6 months. This is a big move that will destress developers significantly since construction activity had been halted all across the country. Homebuyers’ wait for their homes will get extended by this move, but this was in any case inevitable.”
Few days back, ASSOCHAM asked the government for 9 months of force majeure. But with 6 months extension and another three months grace in hands of RERE, the sectoral experts are contented that it is a right step. The government announced 25,000 crore stress fund last time for the real estate sector. So, experts suggest waiting for some more days. As hope is that big stimulus package of around 1 thousand crores for the real estate sector is yet to be announced by the government.
“In another major move to revive the MSMEs, the FM tweaked the definition of such companies to provide benefits to many more units. The collateral-free automatic loan for MSMEs worth INR 3 lakh crores will give a lifeline to nearly 45 lakh units for four years. With this, the government aims to curtail job losses, and this could indirectly benefit affordable housing. Fear of job losses may have caused many potential affordable home buyers to defer their purchase decisions”, explains Puri.