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Like almost every other sector, the real estate industry has also been hit hard by the outbreak of the COVID-19 pandemic. The lockdown that was imposed to prevent the spread of the virus caused severe disruptions in construction activities. Although the government later eased the restrictions and allowed the resumption of construction work, a number of problems have surfaced. In order to protect the interests of the property buyers, the government has extended the completion timelines by 6 months.
One of the main problems that the developers are now facing is the lack of labour. Most of the labour in the real estate sector is composed of migrant workers who have now returned home during the pandemic. A large section of them hasn’t returned to work yet, as a result of which it has become very difficult to resume the construction activities. Only a few developers managed to retain their labour and have been able to get back on track quickly.
Shortage of construction materials is yet another problem. Most of the essential materials used to be imported from other countries, mostly from China. Now with the imports stopped, the developers have to rely solely on indigenous supply, which isn’t sufficient. The shortage of materials is also resulting in rising prices. All these factors are causing a delay in the completion of projects.
The homebuyers’ interest lies in the projects getting delivered. The extension of the timeline would give the developers more time to complete the projects, thus increasing the certainty of project delivery. A 6-month moratorium has also been allowed by the RBI for the homebuyers. Most homebuyers had been facing financial trouble as a result of the pandemic and this would benefit them greatly.
It might be noted that the disruption due to the pandemic came just as the Real Estate sector was starting to recover from a period of stagnancy. In the past few years, the sector was suffering from a liquidity crisis which led to a growing inventory of incomplete and unsold properties. The government was already starting to take a number of measures to help the sector revive, but the pandemic again threw it back into hard times. However, several steps are being taken to help the realty sector get back on track while safeguarding the interests of the homebuyers. It is expected that the situation would improve and the post-COVID era would be a good one for developers and investors alike.
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