Piyush Goyal's advice to property sector wanting support - Sell stocks, reduce rates!

Source :Sify
Author :Sify
Last Updated: Wed, Jun 3rd, 2020, 23:40:21hrs

New Delhi: Minister for Railways, Commerce and Industries Piyush Goyal has a simple suggestion for India's real estate sector complaining of covid-induced stress - Sell inventories!  

Speaking at a video-conference organized by real estate body NAREDCO, Goyal said, "If any of you feel that the government would be able to support or finance these flats, that you can hold longer and wait for the market to improve... The market is not going to improve in a hurry. Things are seriously stressed and your best bet is to sell."

He also reminded realtors to reduce their rates - "Unless you reduce your rates. Anyways you are stuck with your material."

"You can choose to stick with your material and then default with the bank and then the material goes away. Or, you can choose to take whatever. You can consider it as a bad decision and move forward."

Concessions and sops though are not off the table, Goyal added, "We are trying to get concessions and allowances. Nahi hoga toh bhi aapko bechna toh padega. Baaki aap socho jo bhi sochna hai. I cannot be more explicit." (You will have to think about selling inventories irrespective of the concessions. You are free to think whatever you feel like.)

Goyal further elaborated, "Those(realtors) who have sold, leveraged less or got rid of their bank loans and have survived in this downturn. Those saddled with large loans and who kept onto their prices have suffered. My conscience is clear, because during every interaction I have made this point (selling)."

India's real estate sector that has had a practice of warming up on unsold inventories in anticipation of mammoth returns has been complaining of tepid consumer sentiment. KPMG and NAREDCO pegged the loss at Rs 1 lakh crores with a short-term impact of 6-12 months. Meanwhile, a Jones Lang LaSalle April report estimated India's unsold inventory at Rs 3.7 lakh crores. "Unsold inventory increased from 4,42,228 units in the fourth quarter of 2019 to 4,55,351 units in the first quarter of 2020. Further, Mumbai surpassed Delhi-NCR with the maximum quantum as well as value of unsold inventory," said the report.  

NAREDCO which has been organizing web conferences ever since the pandemic erupted resulting in a lockdown has had serious deliberations. In a previous interaction, NAREDCO sought a relief of $200 billion for the economy to recover. Niranjan Hiranandani, President at NAREDCO during an April interaction said, "We have cancer in the economy. We need chemotherapy. Crocin tablet will not help," referring to miniscule measures. Back then Hiranandani said that property prices would drop by 10-15%.  

Surprisingly, Goyal is not the first minister from Modi cabinet to suggest selling as an advice to the real estate sector. Transport Minister Nitin Gadkari had a similar if not more stronger advice - sell "at no profit, no-loss" or whatever price for liquidity boost and move ahead.

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