Although the State government has decided to go in for a phased opening up of the construction sector as part of easing the COVID-19 restrictions, the post-lockdown revival of the real estate scene could be cumbersome.
The sector faces multiple hurdles — financially weakened buyers, labour-related issues and the disrupted supply chain to list a few. Industry sources believe it could take, at the very minimum, a year before the sector can acquire some stability in Kerala.
On the strength of an April 17 State government order, developers have decided to resume work to the extent possible, S. Krishnakumar, chairman, Kerala chapter, Confederation of Real Estate Developers’ Associations of India (CREDAI - Kerala), said.
Halted projects
Between 300 and 400 apartment projects were halted due to the COVID-19 pandemic and the consequent lockdown, as per an assessment by CREDAI - Kerala. The list grows bigger if the other big and small construction projects in the public and private sectors are added.
Keralites in 65 countries, including several hit hard by the pandemic, have booked apartments in the State, Mr. Krishnakumar said. Jeopardised jobs and salaries are prompting many of them to seek extensions to payment schedules. “It is evident that many buyers are reeling under the economic impact of the pandemic. Several have lost their jobs or been forced to take salary cuts. They are seeking an extension of payment schedules, and rightly so. It is a force majeure situation,” he said.
Supply factor
Another problem is the lockdown-induced disruption in the supply chain. With restrictions in place on interstate transportation, sourcing construction materials is difficult. For example, tiles are sourced from Gujarat, sanitary fittings from Maharashtra and Gujarat, and cement from Tamil Nadu. High-end fittings and even good quality clay are imported from abroad. Builders are seeking government intervention to prevent manufacturers from hiking the price of materials including cement.
On the labour front, a different set of challenges awaits. Re-launching work without flouting social distancing norms, for instance, is fraught with problems. Besides, large numbers of migrant workers are expected to return, at least temporarily, to their home States once the lockdown is lifted. One option, say builders, is replacing them with the Keralite workforce returning from abroad. But how far, and by when, this would work out is a matter of conjecture.
Registration deadline
Meanwhile, the deadline for registration of ongoing real estate projects in the State under the Real Estate (Regulation and Development) Act in 2016 is likely to be extended further. In early January, the Kerala Real Estate Regulatory Authority (K-RERA) had ordered all ongoing real estate projects to be registered by March 31. Following the COVID-19 outbreak, this has been extended to May 15. “We may have to extend it even further,” K-RERA Chairman P.H. Kurien said.
