The central government is planning to introduce new rules for handling real estate bankruptcies. It will help homebuyers even as their builders wind down, according to a Bloomberg report quoting people familiar with the matter.
The proposed amendment to the Insolvency and Bankruptcy Code (IBC) will permit resolution of the cases on a project-wise basis, according to the report. It added that that will allow handing over completed apartments to the home buyers even when the developer’s insolvency process is underway.
In August, Minister of State for Corporate Affairs Inderjit Singh Rao told Parliament that as of June this year, 436 out of the pending 1,999 cases of corporate insolvency were in the real estate sector.
The real estate sector in 2022 saw a rebound after witnessing a complete standstill during the coronavirus-induced lockdown and a sharp slowdown thereafter. The year 2022 has been a positive year as the sector posted a strong recovery across segments — housing, office leasing, and retail, among others.
According to data shared by real estate portal Magicbricks, the overall real estate demand jumped 6.7 per cent year-on-year in the first quarter of the year 2022 (Q1). The second quarter (Q2) witnessed a surge of Rs 27.7 per cent, while the growth in the third quarter (Q3) was 2.9 per cent.
The supply was also up by 4.7 per cent y-o-y in the first quarter of 2022, 16.2 per cent in the second quarter, and 6.6 per cent in the third quarter ended September, according to the Magicbricks data.
Homebuyers in 2022 made a good buy thanks to stable property prices, low-interest rates, options of choosing from completed inventory and so on. At the same time developers were able to clear their inventory and debt, because of good sales.
According to a recent joint report by CREDAI-Colliers-Liases Foras, the aggregated sales of three-quarters of CY22 are 16 per cent higher than the aggregate similar three quarters sales of CY21. Despite increasing interest rates and marginal property prices, there is still a parity between the prices and affordability; sales volumes are likely to stay strong.
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