New Delhi [India], June 18 (ANI/Hunk Golden and Media): Real estate is among the worst hit sectors due to Covid-19. Sales and construction of real estate projects across the country came to a standstill during the lockdown.
According to a Residential Market Update January-March 2020 by a real estate portal, the month of March, unfolded unexpectedly with the outbreak of covid-19.The situation brought property site visits and construction activities of over 15 lakh units to a temporary halt across metro cities.
Out of total under-construction units, Mumbai Metropolitan Region (MMR) holds 57 per cent of the inventory, which is 8.90 lakh units. This is followed by Delhi NCR, which has 27 per cent or 4.25 lakh stalled units, the report stated. But the much bigger worry of the developers is the unsold inventory of around 6.24 lakh residential units in the top eight metros as per the report.
Many developers are finding it difficult to manage their cash flow, but at the same time there are few other developers who have strong financials to tide over the situation. Some of these developers are using the current situation as an opportunity to give it back to society or create a strong brand and reputation among their customers, by coming forward to help.
For instance; seeking to ease liquidity problems of customers during this COVID-19 pandemic, leading realty firm Gera Developments today announced that it will not charge any interest or impose any penalty for payments due from 15th March till till 1st July for delayed payment of outstanding instalments.
The company has also set the due date for all the new bills raised, on the basis of the construction milestone achieved, on July 1. Moreover, it will allow customers in need to withdraw part of the amount that they have already paid directly to the company while booking the properties.
Gera Developments has launched a new initiative "GERA® Customer Covid Assistance" -- to help its property buyers during this unprecedented crisis. Gera Developments Chairman Kumar Gera, the former Chairman of CREDAI, has written to all customers, explaining the initiative taken by the company to support them in managing their cash flows during this pandemic.
"We are reading reports of pay cuts and job losses across all sectors in the economy. People are concerned that they may face liquidity and cash flow problems be it corporate entities or at an individual level. Therefore, we have come out with this initiative to support our customers in this hour of need," Gera Developments Managing Director Rohit Gera said.
He hoped that these supports would ease the burden on customers and give time to manage their finances. We believe that the effect of the crisis is causing concern to everyone even though they will not all be affected. Employees are concerned about layoffs and since many companies are not confirming or denying layoffs, every individual is facing uncertainty.
To ease liquidity pressure on customers, Gera Developments is offering a three-pronged support solution. Firstly, the due dates for all the new bills, being raised by the company currently, will fall due only on July 1, 2020, thereby giving more time to buyers for arranging funds. In a construction linked payment plan, the builders sent demand letters to their customers after achieving certain construction milestones. Generally, 10-15 days are given to property buyers to pay the outstanding amount, failing which interest in terms of RERA is charged.
Secondly, the company has offered a moratorium on all outstanding amounts that are due between March 15 and July 1. A customer can approach the company and request to postpone the due date till July 1. For the delay in clearing the outstanding amount, Gera Developments said it will not charge interest from customers or impose any penalty.
According to Section 18 of the Real Estate (Regulation and Development) Act, 2016, a builder is permitted to charge interest for delay on the due amount by the allottee at a prescribed rate, which is 2 per cent above State Bank of India's (SBI) marginal cost of lending rate (MCLR).
Besides providing customers adequate time for clearing their outstanding payments as well as new invoices, Gera Development has come with a unique initiative 'Home Equity Power' under which a customer can draw back some of the money he/she had paid directly to the company while booking the property.
However, the customers can not draw back from the amount paid to the company by banks and other financial institutions as home loans. The draw-back facilities will help customers in meeting any urgent fund requirements. Gera Development has set aside a corpus to support customers who avail this 'home equity' offer. The company however did not disclose the amount it has earmarked for this purpose.
Not only to customers, Rohit Gera said the company has paid salaries, including performance incentives, to all its employees on time and has announced that there will be no lay offs on account of the crisis. Gera Developments has met all its payment obligations towards vendors. Construction has already commenced on projects in Pune and Goa, however, the labour strength is yet to go back to pre covid levels.
The company took various measures for labourers during the over two month lockdown period. Gera Developments, which entered into real estate business in 1970, has so far delivered over 50 projects, comprising six million square feet area, across Pune, Goa and Bengaluru. It is currently developing three residential and commercial projects in Pune and another three commercial projects in Goa. The company caters to the premium residential and commercial segments.
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