It will be survival of the fittest in the long run: Oberoi Realty CMD

There will be a huge supply constraint and this in turn will continue to maintain the prices, or may even push the price of ready flats up, Vikas Oberoi says

The Covid-19 pandemic is expected to impact the real estate sector negatively and pose further liquidity challenges for developers. Vikas Oberoi, chairman and managing director of Oberoi Realty, tells Raghavendra Kamath about his company’s game plan to tackle the crisis.
 

What kind of drop do you see in the company’s sales in the fourth quarter and financial year 2019-20?

Luckily, the lockdown happened in the third month of this quarter and that too in the second half of that month, so the fourth quarter will not be very badly affected.

What kind of drop in sales do you see in FY21, and what will you do to push sales after the lockdown is lifted?
 

These are early days for us to predict how FY2021 will look. On a lighter note, if the lockdown continues for long, people will surely want to get comfortable homes for themselves to stay. So if that is the yardstick, sales should actually be picking up. And luckily for us Oberoi Garden City, which we have built like a city within a city, should do well because it’s a campus development where you have everything within your reach.

I also believe because of the financial stress most developers are going through, there will be a huge supply constraint, which in turn will help maintain the prices or may even push up the prices of ready-to-move flats.
 

Will you defer projects slated for Q1FY21?
 

We will only decide launching a project on the basis of how and when this lockdown opens. So it does not look like we will launch any project in Q1FY21.
 

How are you using digital channels to push and complete sales?
 

We were among the first real estate companies to go digital in marketing our projects. Customers continue to enquire and are waiting for the lockdown to end because real estate is a touch and feel product, and most people would want to see what they are buying before they pay. Transactions will happen online, but physical visits to apartments will continue to happen for a long time to come. These are early days, but the response so far has been tremendous, and this is here to stay.

How far the pandemic will prolong the recovery in the residential real estate?
 

It all depends on how long this pandemic will last. And like I said earlier, in the long run, companies with a strong balance sheet, good governance and a good brand will have a positive impact because it will be the survival of the fittest.
 

Do you think the recent measures announced by the Reserve Bank of India (RBI) will help ease liquidity crunch?
 

I strongly feel that the central government, state governments and the RBI need to come together and listen to people like Deepak Parekh and Uday Kotak, and come up with a comprehensive solution. The government needs to create an environment that is compelling for buyers to buy. This will bring in the much-needed liquidity that the markets are looking for.
 

What do you expect from the government for the sector?
 

We want the government to create the right sentiments for people to buy their home. The government should facilitate the buyer by waiving off stamp duty for the next six months, and allow interest paid on home loans to be deducted as expenses from their income.
 

The RBI should also auction a fund to the tune of Rs 50,000 crore to housing finance companies and banks only for giving home loans. This home loan should be available to buyers at an interest rate less than 6 per cent per annum.