Umesh Luthria
5 min readApr 20, 2020


Covid_19: The God of Real Estate Developers

A few days back (I don’t see the calendar anymore), I attended a couple of Webinars hosted by NAREDCO (National Real Estate Development Council). It was the day when the RBI came out with a relief and stimulus package to counter the Covid effect that is threatening to wipe off humans and their self serving economics from the face of Mother Earth.

The first session — moderated by Anuj Puri (Anarock)was an interesting one - discussing the long term impact of the virus on various segments of the real estate sector. Truly, this pandemic is not going away anytime soon, and even if a vaccine was to be approved tomorrow, the latest scythe of the death reaper would most certainly continue to claim lives for a long time to come. Since a lot of people have jumped on to the astrological band wagon to figure when this reign of unholy terror ends; most sooths predict a victory for mankind not before year 2022. I don’t think we need planets to tell us that. Anyway, back to the reality of realty — social distancing norms, and the way we would now be expected to travel will have commercial, retail and hospitality assets singing “free fallin”. The fear of job and business loss will end up causing severe constipation for luxury residential sales, while many an affordable project may begin to look like an unaffordable luxury. But, a more closed door economy may cause industrial and logistics to shine as bright as the sun in the clear blue skies we are getting accustomed to — partly thanks to the cessation of construction activity.

Conceptually too, the business of finished real estate is showing all the symptoms of Covid positive. The sharing economy that has been so lovingly embraced by “Gen Z” and its successors, one that had just started to attract billions from risk capital, is now quarantined in bed rethinking if it will ever recover. On the other side of the fence, the hospitality sector is preparing itself to be reclassified as hospitals in order to survive. An investor expressing interest in acquiring assets through fixed rental income would be asked to go and get tested for fever on account of displaying traumatic hallucinations in the daytime. With most NBFCs that funded real estate becoming Non Lending Financial Companies, and last mile venture capital having perfected the “pound of flesh” Shylock’s contract, most developers are possibly contemplating a figurative jump from one of the famcy towers built by them.

The recommendation to the numerous constituents of the fraternity by experts — “don’t stop the music”. Yes, the show must go on, even if it is at a slower pace. That would not be a problem, as the construction train would run slow anyway. Construction material will be in short supply, and whatever’s available will be pulled for priority infra projects like highways and bridges — to facilitate the mass commute of nearly half a billion animals now that they have gotten used to walk on them without fear of vehicular traffic. (Not joking). Then again, bulk of the migrant labour has gone back to where they came from, vowing not to return, until Covid is fully gone. Can’t blame them; while the leaders of this great Nation offer them kind words, and “fun” activities to improve their herd immunity, and good samaritans do their bit to step in when no one does, neither the government - nor the employers for who this labour works for - have a concrete solution to make these workers feel safe and secure. The developer has a point — how can he help when he is himself seeking help? It’s akin to a beggar begging before another beggar. I haven’t come across many “she” developers — so will stick to the “he” (no gender discrimination intended — if it does — my apologies), for it took a She by the name of Tara Subramanian to say it in plain and simple words — the woes of the developers are ones of their own making. I can’t agree more.

There are some 25,000 developers in India selling some 250,000 units annually, that is an average of 10 per developer. Do we need so many? Most are unprofessional when it comes to fair trade practices — be it with the consumer or any hand that feeds them (read financiers)— and the reason for such an attitude rests with their “Daddy” protectors. I am sure you are all News consumers — intelligent enough to understand that I shake in my boots to state the obvious in this world of “Big Brother”. It is only fitting that those incapable of facing these stormy times exit. They have milked the market enough to serve their own needs for several generations. Driven by greed for superlative profits, there is scant regard to quality commitments or project costs or completion timelines amongst other defaults. Best of all, at no personal cost as virtually every developer has zero equity investment in any project. It doesn’t surprise me then to hear them say “Me! Me! Me!” when asking the Minister of Urban Planning for sops and goodies, including relaxation of RERA (a consumer protection act) — which is anyway so diluted that consumers have received virtually no relief despite it being in place. I know cause I am a victim in a project of a now “in the news” developer who had a family emergency at a hill station.

While you may think I am in a hate developer mode, I am actually not. I do admire the ones that can stand up and speak the truth — like Vicky Oberoi telling the Minister that this industry does not need any governmental support, sops or intervention; just rationalization of a few concepts that are actually anti consumer — namely, GST on under construction projects, and Stamp Duty on dictated rather than real market pricing. There are quite a few developers who have a strong balance sheet and have adhered to a code which has made them resilient to such circumstances, and attractive to capital and consumer. They will see this period through, even if it means liquidating excess assets. To the rest I say, you should be praying to Covid like you would to God for saving you, else you would have been spending time wondering when your turn would come to be the latest and greatest front page story in every news channel — for all the wrong reasons. By the way, I think “capital” should consider creating an army of professional mercenary developers to enforce step in rights where original developers have failed to keep commitments with them or consumers.

Ending on a positive note, I heard a very novel idea by Srini Sriniwasan (MD Kotak Investment Advisory Ltd.) for the government to look at the current situation as an opportunity to help itself as well as the entire real estate community. He suggested that government at State and Centre level are building a whole lot of offices, residences, warehouses etc.; why not consider buying off finished but unsold affordable class inventory at bulk discounts from private developers for their respective activity and cadre— a) it would provide much needed liquidity to developers while reducing the massive unsold inventory numbers; b) the government would save itself substantial time and money in acquiring much better class - ready constructed assets at much better locations — a win-win for everyone. The money could then be used by developers to actually fund real equity in unfinished projects without the need for much bending and bowing before SWAMIH or submit to the cruel terms of a Special Situations Fund that I heard them crying about.

Will we now see COvid compliant instead of Vaastu compliant RE projects as the latest flavour of the season? Only the God of RE Developers can answer that.