In an interaction with The Industry Outlook, Yash Miglani, MD, Migsun Group explains the impact of pandemic on the real estate sector and how developers are addressing the challenges thereof.
How do you see the current evolution of real estate sector in light of the pandemic? How do you assess its impact on the revival of growth of the real estate sector?
Most of the reputed developers understood the gravity of the situation and took steps to minimize the impact. The pandemic made all of us understand the power of digital media and the impact that it can have on sales. Earlier spend on digital was much less but now it is around 40-50 percent of the total ad spend. During the lockdown, we clocked in a good number of inquiries only because of our active presence on digital media. This evolution will help the sector in the long run too. Migsun Group made sales of over 500 units with a value of over Rs 252 crores during the lockdown between March 25th and 3rd June. The revival of the sector depends on many factors, however, the role of digital media cannot be ruled out. The sector has also become more transparent with the progress of projects being uploaded on websites, e-tours being made available, etc. The sector has been working on transparency where RERA played a major role, but transparency reached newer levels when the pandemic hit the world.
The growing credit risk among developers is compelling banks to pull the plug on real estate lending. How do you see this change? How can the lending sentiment be replenished?
We have been voicing concern over the liquidity crunch for quite some time. The government announced funds last year but much has not been achieved as it is still unused. Banks have to put the real estate sector on the priority lending list so that the infrastructure development should not come to halt. Once, the NBFCs and HFCs start showing trust in the reputed developers, the problem will be solved. There are checks and balances that can be put to ensure the safety of the funds being given to real estate sector. With RERA, the fear of the lending agencies should fade as non-serious players have already been weeded out. We hope the situation improves as so much is at stake with real estate struggling because this sector is the second-largest employer in the country. We also expect the government to restructure the terms of interest and instalments of old loans given to the developers.