Page 17 - Banking Finance June 2020

HOUSING

HOUSING

NEWS
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NEWS

Parekh sees up to 20% it kills," he said, adding that they change bankers just for 50 basis points
should consider the moratorium an- or 70 bps reduction.
crash in home prices nounced by the government as the

Property developers should be pre- "last resort". Parekh said the Reserve Bank of India
should consider one-time restructuring
pared for up to a 20 per cent fall in Across the top seven cities, developers of developers loans to tide over the
housing prices and have to create li-
had an unsold inventory of 455,000 crisis in the industry. "The NPA norm of
quidity by selling their inventory at units worth Rs. 3.7 trillion at the end 90 days should be changed to 180
whatever prices they get, HDFC Chair-
man Deepak Parekh said. of March, according to consultancy days," he said, adding that the RBI
firm JLL. Parekh said developers had to should also consider direct purchase of
"Next six months are going to be ex- "compromise" on many aspects during bonds and commercial papers of devel-
tremely tough. You need liquidity. Get these times. opers to fund the economic activity.
the cash flows coming by selling prop-
erties at whatever prices you get. "Take home less money this year and Expats depart, housing
Don't sit on the completed proper- leave more money in the business. Cut
ties," Parekh said in a video call, at- expenses and be stingy in expenses," rentals plunge 10-20%
tended by about 5,500 developers and he said. Developers should focus more Expats are returning to their respec-
jointly organised by industry bodies on completing projects even at the cost tive countries due to pandemic.
Naredco and Credai. of launching new ones, he added.
In Mumbai, the G Block in the Bandra
He said it was an excellent buying op- He advised them to go for develop- Kurla Complex, which has around 150
portunity for potential homebuyers ment management contracts, joint marquee residences, rarely had any
with job security and savings. developments, and debt asset swaps vacancies before the Covid outbreak.
and so on to reduce the liquidity bur-
Parekh added that demand for com- den. "Many developers have given Today, in the wake of expats packing
mercial real estate would continue to their plots to large developers such as their bags and heading home, it is wit-
be there in the long run. "After the Godrej and Tata, and working in part- nessing a vacancy level of about 30
lockdown, it won't be a situation nership with them. Don't kill yourself percent -- nearly one in three homes
where the entire workforce would is empty.
by doing everything yourself," he said.
want to work from home -- people Down south in Bengaluru, brokers told
would still need to meet others. So in Parekh said developers should sell eq- Moneycontrol a penthouse leased to a
the long run, demand for commercial uity to PE funds, global pension funds, consulate for Rs 3.2 lakh was recently
real estate will not evaporate." and sovereign funds which would help given on rent for Rs 2.5 lakh, a reduc-
them in the long run.
Developers, he said, should be careful tion of over 20 per cent, after the
about leverage. "In boom times, it He said they should nurture relation- expat family using it decided to return
amplifies profitability and in bad times, ships with bankers and should not home due to the pandemic.

BANKING FINANCE | JUNE | 2020 | 17