HDFC Chairman Deepak Parekh’s views on real estate: Analysis
HDFC chairman Deepak Parekh shared his ideas to mitigate the impact of the COVID-19 pandemic on the real estate sector. He exhorted the developers to clear off unsold inventories at reduced prices to maintain the liquidity surplus in the sector.
RBI has already announced two rounds of measures to boost liquidity in the system. Sitting on unsold inventories in hope of a better price would be a bad idea in the current situation. Also, the tax will be levied on the unsold stock in two years. So, it’s in the best interest of all the stakeholders to offload unsold inventories to avoid a liquidity crunch.
According to an estimate by NAREDCO, prices in the real estate sector will come down by 10–15%. Deepak Parekh has estimated this to be somewhere around 20%. So, this is the perfect time for the real estate investors & end users to buy or invest in property. Already, various developers are offering discounts & offers to lure investors.
All these factors create an excellent buying opportunity for investors.
HDFC chairman also asked the state governments to waive off stamp duty to help revive demands. Maharashtra government, in the month of March, has already announced a 1% concession in stamp duty charges, applicable in MMR & Pune.
Deepak Parekh also hinted that a recommendation has already been made to the RBI for extending the relaxation in the classification of NPA norms to 180 days from 90 days to help the sector. He also emphasized that developers should focus more on the completion of the projects and should work collectively to ensure timely delivery of the projects. They can get into joint arrangements with the corporates for the same.
There are speculations going on about commercial real estate being the worst hit because of the introduction of ‘work from home’ culture owing to lockdown. Deepak Parekh denied the possibility of any such scenario or any reduction in demand for commercial spaces in the near future. He emphasized that work from home is effective only during the lockdown. There are jobs that cannot be carried out from home. Employees need to share the environment for the proper execution of business.
