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Residential demand will be temporarily subdued, says Kamal Khetan of Sunteck Realty

Bavadharini KS | Updated on May 31, 2020 Published on May 31, 2020

Slowdown in demand is more pronounced in commercial and retail segments: Sunteck Realty CMD

Since the outbreak of the Covid-19 pandemic, the real-estate sector has taken a hard hit. While the slowdown in the residential segment could only be for a short period, the demand recovery in the commercial segment, which had been resilient, could be prolonged, Kamal Khetan, Chairman and Managing Director, Sunteck Realty, told BusinessLine.

What has been the impact of the lockdown on Sunteck Realty?

During the lockdown, the sales team hasn’t been able to work to their full capacity. We decided to test the market.

In a short period of 10-15 days, we launched an online (marketing) platform — Suncteck Air.

We did marketing around it and the response, to be honest, surprised us.

Nearly 25-30 apartments in Naigon, Mumbai, and 25 apartments in ODC (Oshiwara District Centre, Mumbai) were booked. These were ready-to-move-in units (able to move in the next six months), in the range of ₹2-2.5 crore.

Once the lockdown lifts, we will see inventory continue to move in that segment.

Do you think the trend of online sales will continue?

Seeing the experience, there are buyers for online also. If people trust the brand, I don’t think they mind buying a property digitally. This is despite the negative sentiment around, you know, with pay cuts and job losses.

Also, when people look at our property online, we try to give all the details and make the experience as close to real life as possible.

Does the 180-day extension on project delivery help the company?

This is no benefit, to either developer or buyer. This is a necessity. Even if I can give possession of a property, a buyer wouldn’t have been able to take possession of the property because of the restriction on movement. Also, with the lockdown in place, there were temporary logistics and labour issues. Project delivery would have anyway been delayed by at least 2-3 months.

So this six-month extension would avoid the penalty charges for developers.

Will CLSS (Credit-Linked Subsidy Scheme) extension to home-buyers help Sunteck? What percentage of your portfolio is in the MIG (middle-income group)segment?

CLSS (extension) is definitely a benefit for the buyer. Knowing that the buyer can get subsidy for home purchase till March 2021 benefits the developer, too.

It helps the existing inventory in the market to move faster. Sunteck has 80 per cent of its portfolio in the ₹2-3-crore range. And that is where we see demand, too.

People with salary of ₹12-18 lakh can buy house property, now that the CLSS benefit is extended.

What has been the impact of Covid-19 on your on-going residential projects?

During the (initial) lockdown phase there were challenges. A few materials that were imported faced slight delay. But since we have our own construction feed and supply, majority of the materials needed were available within India.

We did face a delay of 2-3 days, but not much of a problem after the Centre gave a go-ahead for construction. So, most of our sites are running on full capacity.

However, if I had to increase the number of labourers in the site, that’s a little bit difficult. There are now 10 projects under construction.

After the (Maharashtra) State government relaxation, we have received permission to start construction activity in nine projects.

Since we have in-situ (on-site) workers, we were able to resume construction immediately. However, for one site, we haven’t received permission yet. That’s because the project is in a sensitive area of the pandemic. But we are hopeful that we will resume soon once the situation gets better.

Given all these, will there be a postponement in project delivery or future projects?

Lockdown (restrictions placed on construction) was effective for 45-60 days, which led to difficulties in logistics. So projects could be postponed, perhaps, for a period of 2-3 months, but not beyond.

Also, future approval required for on-going and upcoming projects may be delayed as the government is not operating at full capacity yet. To that extent, again, there could be delay.

On the project launch front, obviously, we were looking into launch projects like the 4th Avenue second tower (Mumbai) in the first or second quarter of FY21, but that is likely to be pushed to the third quarter. Most of the future launches may be pushed by at least by one quarter.

When will demand recover?

There is a demand slowdown across industries and not just for real estate. But in real estate, I feel this slowdown in demand is more pronounced in commercial and retail segments than in residential.

An increase in people working from home could lead to people looking to buy a house property as they need a comfortable home to work from. But demand in the residential segment will be subdued temporarily.

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Published on May 31, 2020
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