The global pandemic COVID-19 has worsened businesses on a major level for multiple industries, and the real estate sector has not been spared as well. One among the worst hit is apartments in Ambattur owing to the constant rise in coronavirus cases. Expert opinion says that the procurement of your dream house may be delayed by six months to one year. The Confederation of Real Estate Developers Association of India (CREDAI)-Tamil Nadu has petitioned the Chief Minister Edappadi K Palaniswami, urging him to invoke the ‘force majeure’ clause under the Real Estate Regulation Development Act of 2016. This clause usually comes into action when there are severe damages caused by the act of nature. This
initiative by CREDAI functioning in full-force depicts the impact that the pandemic has thrust
upon the real estate industry.
Force Majeure – The Need of the Hour
The Union Finance Ministry issued an official memorandum stating that in view of the disruptions of supply chains from China or any country can be covered under force majeure.
S. Sridharan, the chairman of CREDAI, Tamil Nadu Chapter said that invoking the clause is
the need of the hour as it will help extend the delivery duration of flats by a minimum of six
months to a year.
The Current Scenario
Currently, almost all construction activities have come to a standstill due to delays in acquisition and delivery of raw materials. Notably, the construction of apartments near Chennai Airport and flats in Kolathur has faced a drastic blow. Furthermore, due to lack of labours given the current state of affairs, there are severe delays in the on-going projects. As per Sridharan, the stress on invoking the clause is most essential in order to prevent the collapse of the real estate industry.
In addition to the delays, the payment dues from customers have also been irregular, making the situation worse for the developers. With a bleak outlook on the whole, at present, the developers are facing difficulties in payments ranging from EMIs towards huge loans drawn from the bank to even taxes and premiums they owe to various governmental bodies.
Taking into account the recent developments and the catastrophe wreaked by COVID-19, as per CREDAI's suggestion, it would be best for the government to rule in favour of invoking the force majeure clause. Also, owing to the fact that millions of construction workers not getting remunerated, CREDAI has insisted the Labour and Employment Minister Nilofer Khaleel to get in touch with State Building And Other Construction Workers Board to come up with a funding strategy for the labours in the interim period. Although the future seems uncertain for the real estate world, these necessary measures which when put in action may find a thin silver lining.