Sell unsold units at ‘no-profit-no-loss’ to save interest, boost liquidity: Gadkari to realty cos

NEW DELHI: Union Minister Nitin Gadkari called on real estate players to sell unsold housing units on a non-profit basis on Wednesday to increase their liquidity status and save interest costs on loans.
The outbreak of coronavirus disease has impacted the real estate sector, which was already recovering from the slowdown in demand, the highway, transport and highways minister said while speaking to a webinar organized by the NAREDCO real estate agency.
Pledging his full support, Gadkari, who also owns the MSMEs portfolio, advised builders to send their representatives to the housing and finance ministries as well as the Prime Minister's Office (PMO) to suggest ways to deal with the current crisis.
To overcome the crisis caused by COVID-19 and create demand for housing, the chief minister offered a series of suggestions to builders, from expanding business in rural areas to diversifying road construction and creating his own companies. housing finance.
Citing an example from the auto industry where many manufacturers have their own finance companies, Gadkari said that real estate companies might consider setting up their own housing finance companies to lend to clients at lower rates and not fully rely on banks.
He said there is a need to strengthen non-bank financial companies (NBFCs) through infusing capital from the government and private actors.
NBFCs should take advantage of funds in international markets where interest rates are lower.
The minister proposed lower interest rates on longer-term mortgage loans so that clients' monthly equal payments (EMI) remain lower.
As for builders who find themselves in large inventories of unsold homes, Gadkari advised builders: "Don't be greedy. You won't get a higher price. Whatever price you get, sell your properties to increase liquidity and continue ahead".
He said that there are many builders in Mumbai that are not liquidating their unsold stocks and are rather waiting for prices to rise to Rs 35,000-40,000 per square foot.
"They are making mistakes. Interest costs for banks, financial institutions and private lenders are increasing," the minister said.
Developers should negotiate prices with prospects and even sell at "no profit or loss" to avoid huge interest costs, Gadkari said.
Affirming that there are great opportunities in their ministries, he asked developers to diversify into logistics parks and road construction where precast technologies were used.
Gadkari said his ministry is developing bus depots, fuel pumps, hotels, restaurants, and rail bridges along highways where real estate companies could participate.
The plan is also to develop municipalities along the Mumbai-Delhi corridor, he reported.
Gadkari also told builders to expand their businesses in small cities and towns with affordable housing projects below Rs 10 lakh and not just focus on big cities.
NAREDCO National President Niranjan Hiranandani said the real estate sector has been struggling for the past few years due to the instability created by reforms like demonetization, GST and the RERA real estate regulatory law.
"Now, with this coronavirus outbreak, work has stopped," he said, and sought a government stimulus package to deal with this crisis.

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