14 - 04 - 2020

CREDAI Bengal Daily News Update | 14.04.20

Shaky real estate sector staring at 65% payment default from

customers amid lockdown

ICC has further recommended interest free loan EMI moratorium for six months to be

provided as a relief to this extensive manpower driven industry to survive this difficult

time.

Owing to the lockdown that has brought almost all economic activities to a standstill, the

already sluggish real estate sector is experiencing 65 per cent payment defaults from customers

for underconstruction projects, says Indian Chamber of Commerce (ICC)

The Indian real estate sector, which is currently worth USD 12 billion and contributing about

five per cent to the GDP, has witnessed a drastic drop in sales with no clarity on revival due to

social quarantining, it said.

“The real estate sector, which is already in a slump since last year, is presently experiencing

almost 65 per cent payment default from customers paying the installments linked to

construction,” ICC Director Rajneesh Shah said in a release.

Newspaper/Online Financial Express (Online)

Date April 13, 2020

Link https://www.financialexpress.com/industry/shaky-real-estate-sector-staring-at-65-

payment-default-from-customers-amid-lockdown/1927144/

He said due to the lockdown, many customers have been requesting developers to allow them to

delay their payments as homebuyers are also faced with liquidity challenges due to COVID-19

related issues.

“We believe the payment defaults by customers will increase in the next few months,” he

added.

Singh further said the Chamber has made certain recommendations to the government wherein

it has suggested that the Delayed Payment Act prevalent in the MSME sector should be

extended to the real estate industry.

“This will discourage payment default by customers, thus enabling developers to charge penal

interest on delayed payment beyond agreed period of time,” he added.

He noted that since there is uncertainty over the completion and handover of residential

projects, mainly due to scarcity of labour and raw material, ICC has sought extension of six

months from housing regulatory authority RERA for delivery of such projects.

“Given the current circumstances, we don’t see the sector reviving before August. Real estate

sector desperately needs a bailout package on an urgent basis,” Singh added.

Meanwhile, ICC has also suggested waiver of municipal taxes for at least one quarter and that

organisations which are not able to clear up taxes or bills should not be penalised and given

around 3-6 months’ time for repayment of the same.

ICC has further recommended interest free loan EMI moratorium for six months to be provided

as a relief to this extensive manpower driven industry to survive this difficult time.

“This will in turn prove helpful in protecting employment of the large manpower associated,”

he added. ____________________________________________________________________________________

Realty players fear pay cuts, job losses as lockdown hits revenue

However, property developers and consultants believe that damage could be minimised if

the government announces a big relief package for the industry as well as the overall

economy.

Real estate sector, which is estimated to incur a loss of over Rs 1 lakh crore due to nationwide

lockdown, is likely to see pay cuts and job losses as cash-strapped builders will look to reduce

their fixed cost at a time when their sales revenue has almost come to a grinding halt, according

to industry players.

However, property developers and consultants believe that damage could be minimised if the

government announces a big relief package for the industry as well as the overall economy.

"Real sector is the second-largest employer after agriculture and provides for both blue and

white collar jobs. Construction and other allied workers comprise a very important segment of

the Realty Sector. There might be job losses and pay cuts," CREDAI (National) Chairman

Jaxay Shah said.

As of now, he said, the priority is to provide labourers with basic amenities.

"It's too soon to say anything on pay cuts as this will totally depend on how long the pandemic

continues," Shah said.

NAREDCO President Niranjan Hiranandani said: "There will be an obvious impact on sales,

and that in turn will impact profitability of business organizations. So, a pay cut might be the

first reaction across business organizations, some jobs being lost might be the second."

He said revenues of developers, which had already been facing liquidity crunch, would be badly

hit, resulting in defaults in repayment of debts.

"If outstanding payments get defaulted on, and the numbers keep rising, companies may go

bankrupt, this in turn will directly impact jobs. Before the COVID-19 pandemic, job losses were

around 15 per cent of the total workforce, this may increase to 25 per cent," Hiranandani said.

However, he said if the government soon announces a stimulus package, "Things may not end

up being so bad, in terms of companies going bankrupt or jobs being lost."

Puravankara Ltd MD Ashish Puravankara said, "While the listed players, like us, who are

geographically de-risked and have diverse business portfolio, will be able to plan and organise

Newspaper/Online ET Realty (Online)

Date April 13, 2020

Link https://realty.economictimes.indiatimes.com/news/industry/realty-players-fear-pay-

cuts-job-losses-as-lockdown-hits-revenue/75124134

the next steps; the current impasse may pose a problem in the long term for a few companies

who might have to take some austerity measures in the shape of job losses or pay cuts."

Home-grown property consultant Anarock Chairman Anuj Puri said there could be pay cuts and

job loss if lockdown continues for a longer period.

"If the lock down was to open in the next 1-2 weeks then we may not see as many job losses or

pay cuts," he said.

Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa, CBRE,

said: "The Covid-19 situation is still evolving in India and it is too soon to comment on the

impact it will have on the industry."

Ramesh Nair, CEO & Country Head, JLL India, said the company has taken many cost

management actions to protect its employees and continue to serve clients.

"JLL has a strong balance sheet and JLL's businesses in India and beyond are positioned to

emerge with resilience from the challenges of the COVID-19 pandemic. To help ensure our

company can continue to protect our people and serve our clients and shareholders now and

when the economic and business environment improves, our leaders have agreed to take several

prudent cost management actions," he said.

This discipline would help the company to support its staff and clients across India through this

challenging time and be ready for future opportunities, Nair said.

Mani Rangarajan, Group COO, Housing.com, Makaan.com and Proptiger.com, said job losses

and pay cuts in the sector will remain limited. He expects real estate to gain renewed interest

from both end users as well as investors because of sharp correction in other investment tools

like the equity market.

Manoj Gaur, MD, Gaurs Group, said the company has been performing well in terms of sales

from the last 3-4 years and disruption of a few months will not have any major impact on

financial strength of the company.

Nayan Raheja, Executive Director, Raheja Developers said: "We are waiting and watching on

the current situation and how long the lockdown continues to take any definitive call on this

matter. However, at the moment all labour and staff are being supported."

He demanded that the government should restructure existing loans of the builders.

Ashok Gupta, CMD, Ajnara India, said, "These are tough times, but we are standing strongly

with our employees amid this crisis."

NCR-based KW group Director Pankaj Jain said: "As of now we are not deducting salaries of

our employees. In the current situation, we all need to support each other. Companies must

show more empathy towards their staff."

Akshay Taneja, MD, TDI Infratech, said, "It is too early to take a call." MJH MR

________________________________________________________________

Expect construction work to resume in next 7-10 days: Niranjan

Hiranandani

We expect to get the green signal from the govt soon, says founder & MD of Hiranandani

Group.

First a word on the extension of the lockdown in Maharashtra up until the month end.

Does that really put a spanner in the works? Were you all gearing up in any case to begin

construction sites after the 21-day national lockdown?

There was a thing in our mind that it could be extended. However, three things have happened.

Number one, transport has fully been opened up for the purposes of goods and though there

were initial hiccups, by the mid of this coming week, we should have the transport operations in

line. A large number of truck drivers were just not available.

We have had meetings with the home ministry, we have had meetings with the commerce

ministry, the prime minister’s office and the finance minister and the entire direction is that

factories and construction will be allowed to start in a phase-wise manner subject to conditions,

safe distancing, looking after the labour, keeping temperatures regularly and doing all that is

necessary in order to contain the problem of coronavirus. This recommendation has gone on

Saturday evening to the home ministry and we are expecting that by today or at the most

tomorrow morning, we should be getting a green signal in terms of starting all the segments in a

phase-wise manner. We do not expect everything to start tomorrow.

Number two, the essential works like municipal corporation, essential work for the monsoon

and the railways, all these activities are expected to start; some of them have started last week

with the migrant workers who are already on the site. So my view is that in the next 7 to 10

days, construction will start in phase-wise manner but not in every location, not in every place,

not in order to create a migration of workers again. It is intended to be started with all

precautions being taken. It is a correct decision and we are looking forward to it for quite some

time.

That is the other thing that I wanted to talk about. While it seems obvious that when it

comes to construction sites or real estate as a sector, the first phase is obviously going to be

workers who are locked in on the sites already but what about the migrant labourers who

for big cities like Delhi as well as Maharashtra was a big issue? So how is it that you

mitigate this labour issue because most of them have already fled to their own native

states?

Construction takes up 15% of the workforce of India. It is a huge amount. Now the idea was

that those who are already there and have not moved out to the villages, we should start giving

Newspaper/Online ET Realty (Online)

Date April 13, 2020

Link https://realty.economictimes.indiatimes.com/news/industry/expect-construction-

work-to-resume-in-next-7-10-days-niranjan-hiranandani/75125572

the work to them first and that is the most important factor. Second, a large number of people

were required for agriculture operations during the harvest season and the planting of the crops;

so I think that is the second part of it. We do not want the migrant workers who have already

gone to the villages to rush back. So the first phase of activity probably for the next 10 to 15

days will be to stick to those workmen who are already in the cities and in the nearby areas and

also near the factories. So that is priority. Second priority would be probably after the lockdown

is lifted for the migrant labourers to actually come back.

________________________________________________________________

Gujarat RERA allows one-time extension in project completion

deadline

Gujarat RERA has also waived the fee for application to extend the date. The measure

will give projects having end date within one year from now additional time for their

completion.

Gujarat Real Estate Regulatory Authority on Monday provided some relief to real estate

developers to help the realty sector mitigate the impact of the current lockdown to contain

the COVID-19 pandemic.

The state regulator has allowed realtors to apply for a one-time extension in the project

completion deadline (end date). The extension will be provided to all registered projects having

their project end date on and between April 1, 2020 and March 31, 2021.

Gujarat RERA has also waived the fee for application to extend the date. The measure will give

projects having end date within one year from now additional time for their completion.

“Projects having their end date one year from today would be in position to realign their

construction schedules to address the disturbance caused by Covid-19 lockdown,”

Gujarat RERA said in its order issued on Monday. As many as 1,570 or 32% of the ongoing

projects are going to benefit from this relaxation.

Apart from this, the application fee for alterations has also been waived.

“Projects with multi-block development plans would be in a position to revisit their

development plan and may consider de-registration of a portion of their inventory through an

alteration application i.e. bringing down the size of the registered project by converting the

project into a phase of the approved layout plan,” the regulator added.

With these measures, Gujarat RERA has granted relief to more than 80% of the ongoing

projects across the state which are likely to be completed in next four years.

________________________________________________________________

Newspaper/Online ET Realty (Online)

Date April 14, 2020

Link https://realty.economictimes.indiatimes.com/news/regulatory/gujarat-rera-allows-

one-time-extension-in-project-completion-deadline/75133011

Ludhiana smart city projects hit roadblock due to Covid-19

Though sources revealed officials had tried to get permission for keeping the projects

ongoing, they did not get the sanction. The officials, however, claimed their priority now

was to save the public, and projects could wait.

The Smart City projects had gained pace after passing through great difficulties, but once again,

these projects have hit a roadblock in the form of coronavirus, due to which construction

activities have stopped everywhere, and officials have claimed that until the time the lockdown

continues, it is difficult to begin construction at the sites.

Though sources revealed officials had tried to get permission for keeping the projects ongoing,

they did not get the sanction. The officials, however, claimed their priority now was to save the

public, and projects could wait.

Malhar Road project

The much awaited project, which was included in the very initial project, on the basis of which

the city was selected in the first top 20 smart cities, will take more time to get completed. At

this moment, on one side of the road, almost all utilities have been made underground, and work

has started on the other side of the road. But as soon as the lockdown was announced, it stopped

immediately. The deadline for the project will get extended according to the curfew period.

Under this project, smart utilities, shared pathways, regulated parking, and other smart concepts

are proposed for Malhar Road. It is also aimed to provide adequate streetscape elements, such

as streetlights, wayfinding and parking signage, garbage bins, amenity zone for vendors, bus

shelters, public toilets, etc.

Sarabha Nagar beautification

This project was very much near completion in the next few months, as work was going on at a

fast pace. This project was designed to give a new shape to Sarabha Nagar main market with

smart parking, fire-fighting arrangements, undergrounding of cables, public toilets, etc.

Everything was going on smoothly, but now it is stuck.

Pakhowal Road bridges

For this project, residents have waited for more than a decade, and when it was included in the

list of Smart City projects, people were eagerly waiting for the work to start. This railway

overbridge/underbridge is designed to solve the traffic mess near Pakhowal railway crossing, up

Newspaper/Online ET Realty (Online)

Date April 13, 2020

Link https://realty.economictimes.indiatimes.com/news/infrastructure/ludhiana-smart-

city-projects-hit-roadblock-due-to-covid-19/75126065

to Hero Bakery Chowk. Work had just started in the city, and digging had taken place at some

points, but now the work will resume after the lockdown period. With extension in the

lockdown period, the situation has turned grim.

Sidhwan Canal waterfront

It is under the Smart City Mission that the 1.15km long stretch of Sidhwan Canal is being

beautified. Under this project, Sidhwan Canal is being beautified from Pakhowal Road to

Ferozepur Road, behind MC Zone D office in Sarabha Nagar. This project has been designed to

curb pollution in Sidhwan Canal.

The separate cycle tracks, pathways, seating arrangements, green lawns, entry plaza for parking

spaces, toilet blocks for men and women, rooftop solar system, kids sandpit play area, kids

climbing wall, and open gym equipment are being installed. The project was expected to get

completed most probably in April, but now due to the lockdown, it will miss the deadline.

LED streetlights

The storm over LED streetlights has been shaking the civic body since this project was started,

because councillors showed dissatisfaction over the working of Tata company, especially the

maintenance part. Work in two zones had completed, but the company had already missed the

deadlines twice, and it was given extension up to April, but now work has been stopped, and

only necessary maintenance work is going on. The project was expected to replace over one

lakh ordinary streetlights by LED lights for better lighting and energy saving.

Modern slaughterhouse

Even after its completion, the modern slaughterhouse, located at Hambran Road, could not be

made functional. The civic body earlier took a long time to finalise the private firm to run this

slaughterhouse, and now when the firm was finalised, approval from the Finance and Contracts

Committee (F&CC) is pending. Since meeting of this committee could not take place due to the

curfew, the slaughterhouse is waiting to get operational. The modern slaughterhouse has been

constructed to stop manual slaughtering in the city.

The superintending engineer of bridges and roads department, Rahul Gagneja, said, “When

everything has stopped, then it was obvious for construction works also to stop. The deadlines

will also extend accordingly. Our priorities are to help people and save them from this disease.

At this time, one should think about survival, rest everything is secondary.”

Views of residents

Shivani Sood, a resident of Civil Lines, said, “When people were moving out, these projects

were going on, creating a traffic mess, but now when the public is locked up inside, not even a

single project is functional. If possible, authorities should allow these works, but with minimum

involvement of labour.”

Another resident from Model Town Extension, Karamjit Singh, said, “It is a wise decision to

stop construction work also, because even there, workers gather in large numbers, and the

disease can spread wings. If we defeat this disease, we will get enough time to complete the

projects as well.”

________________________________________________________________

Karnataka to sell Benguluru housing sites to raise funds

"The government will auction 12,000 corner sites, lying idle in Bengaluru, to raise funds

for development works," Yediyurappa said after a meeting with Ministers and officials

here.

With the coronavirus pandemic and subsequent 21-day lockdown triggering a financial crisis,

cash-starved Karnataka has decided to auction 12,000 housing sites to raise funds, according to

Chief Minister B.S. Yediyurappa on Monday.

"The government will auction 12,000 corner sites, lying idle in Bengaluru, to raise funds for

development works," Yediyurappa said after a meeting with Ministers and officials here.

Yediyurappa also holds the portfolio of Bengaluru development.

The meeting explored ways and means to mobilise resources for funding various schemes,

announced in the budget for 2020-21 on March 5 and passed in the Assembly on March 24.

"The state government will also be able to mobilise funds from stamp duty and penalty by

regularising unauthorised houses and buildings after a speedy disposal of cases pending in the

high court and the Supreme Court," said the Chief Minister.

Though the state government is set to extend the 3-week lockdown by 15 days in the

coronavirus hotspots, like Bengaluru and Mysuru, if not in the entire state, from April 15, it's

waiting for the Centre's guidelines for partial relaxation.

"The meeting also decided to amend the law to allow sale of vacant sites/plots in private and

cooperative housing societies for constructing homes or flats and raise funds from their

registration fee, including stamp duty," said Yediyurappa.

"Corner and vacant sites in towns across the state under the State Urban Development Authority

will also be auctioned to raise funds for post-Covid expenses to restore normalcy," the Chief

Minister said.

The meeting also decided to use Rs 1,000 crore with the state-run Rajiv Gandhi Health

University to modernise all state-run hospitals to improve services.

The state government has decided to distribute free milk for one week to the needy, including

daily wagers, street vendors and construction workers.

Newspaper/Online ET Realty (Online)

Date April 14, 2020

Link https://realty.economictimes.indiatimes.com/news/residential/karnataka-to-sell-

benguluru-housing-sites-to-raise-funds/75133073

As lakhs of farmers and growers of fruits and vegetable are reeling under the lockdown,

Yeddiyrappa urged sugar mills for early release of Rs 2,834 crore dues to cane growers.

"The state government has released Rs 45 crore compensation for paddy crop loss in Raichur

and Koppal districts in the state's northern region due to hailstorm, winds and unseasonal rains,"

Yediyurappa said.

The Chief Minister will hold a cabinet meeting on Tuesday after Prime Minster Narendra Modi

addresses the nation at 10 a.m. on Covid measures and the lockdown.

________________________________________________________________

Construction workers in Coimbatore left in lurch

Workers still waiting for the dole include both whose bank accounts are already with the

board and those who had given their bank details after the announcement, said union

representatives.

Construction workers in the district registered with the labour welfare department have said that

they have not received the special assistance of 1,000 promised by the state government to help

them during the lockdown.

Workers still waiting for the dole include both whose bank accounts are already with the board

and those who had given their bank details after the announcement, said union representatives.

N Selvaraj, general secretary of Tamil Nadu AITUC Construction Workers’ Union, said the

money transfer system of the labour welfare department was ineffective and was the main

reason for the delay.

A total of around 96,000 construction workers in the district are registered with the workers’

union, Selvaraj said. “Of these, officials say around 56,000 have not renewed their details with

the labour department. Of the remaining 40,000, the department has bank details of only 12,000

workers,” he said.

Names of workers dropped from the labour department list because of non-renewal does not

follow established norms, he said. “Before names are dropped, workers have to be given a

showcause notice and a 60-day time period,” Selvaraj said.

“The department says it will give assistance only to those workers who have a standing

registration in the board. At a time of a huge crisis like this, it is not fair. Almost 85% of the

total construction workers here depend on daily wages for sustenance. Due to the lockdown, all

labourers are affected. All should be given the assistance,” he said.

________________________________________________________________

Newspaper/Online ET Realty (Online)

Date April 13, 2020

Link https://realty.economictimes.indiatimes.com/news/industry/construction-workers-

in-coimbatore-left-in-lurch/75126030

Tenants seek Telangana government help as landlords refuse to

waive rent

At a time when lower and middle class families are facing a lot of difficulties due to

financial crisis and lack of essential commodities, the added burden off rent comes as a big

blow.

House and flat owners in certain parts of Old City areas have refused to waive off rents for their

tenants during the ongoing lockdown.

At a time when lower and middle class families are facing a lot of difficulties due to financial

crisis and lack of essential commodities, the added burden off rent comes as a big blow.

Tentants TOI spoke to said they had requested their lessors to go easy on them, but had

allegedly been told by the owners that they depended entirely on rent to make ends meet. "We

have been told to pay the ongoing month's rent first without any delay or expectation of

relaxation. Though we have informed them about our problems and the government's

instruction, they have refused to accept our pleas citing they too depend on our rents," Aziza

begum said.

Though there are lessors who have waived off rents, they are too few and far between. A few

tenants told TOI that they were yet to speak to their property owners about rent relaxation.

"My owner didn't ask our rent so far, so let us wait. At this time, we hope for release from

mounting financial burden. There's no way we can pay rent if we are unable to earn," said

Younous from Tappachabutra area.

A woman from old Sabzimandi Karwan said she had next to nothing for the coming days and

was depending entirely on tea to pull through the day. Despite this, her house owner is

unwilling to waive off or even reduce her rent.

________________________________________________________________

Newspaper/Online ET Realty (Online)

Date April 14, 2020

Link https://realty.economictimes.indiatimes.com/news/residential/tenants-seek-

telangana-government-help-as-landlords-refuse-to-waive-rent/75133165

Facility management companies ensure workers' engagement with

extra incentives

The companies are doing so to ensure worker engagement, and several clients are ready to

pay for this. Workers are also being provided food, temporary accommodation, and

hygiene support and their safety is taken care of as well. Top facilities management

companies in India employ lakhs of blue-collar workers.

Facility management companies are providing extra incentives to blue-collar workers who are

engaged in the work of cleaning and sanitising commercial towers and residential complexes.

The companies are doing so to ensure worker engagement, and several clients are ready to pay

for this. Workers are also being provided food, temporary accommodation, and hygiene support

and their safety is taken care of as well. Top facilities management companies in India employ

lakhs of blue-collar workers.

“Considering the challenge and the risks involved, we have also looked into the aspect of

additional benefits for these people to ensure that their families and next of kin are safe while

they are fulfilling their professional responsibilities,” said Anshuman Magazine, chairman -

India, South East Asia, Middle East & Africa, at CBRE.

Given the Covid-19 scare, workers have to undertake deep cleaning of complexes almost every

second or third day, in addition to the regular hygiene measures, resulting in their work almost

doubling.

“Blue-collar workers’ incentive is approximately 80-100 per cent of their average take-home

salary. We are giving salary to everyone and extra incentives to people who are doubling up and

are on the ground risking themselves,” said Pradeep Lala, chief executive, Embassy Services,

which manages more than 70 million sq ft in 14 cities.

Cushman & Wakefield has asked its facility management and security workforce in a majority

of the cases to stay at the sites for the duration of the crisis.

It has made arrangements for their food and accommodation, apart from incentivising them with

additional daily allowance for this period.

“This ensures that the risk of community transmission at these respective locations is practically

negligible,” said Rajesh Sharma, managing director – IFM & asset services, Cushman &

Wakefield.

Newspaper/Online ET Realty (Online)

Date April 13, 2020

Link https://realty.economictimes.indiatimes.com/news/industry/facility-management-

companies-ensure-workers-engagement-with-extra-incentives/75119592

While some of these companies have ensured that a minimum number of workers have been

posted on sites, others have divided the workforce into 2-3 batches that would work on sites

with a 15-day schedule alternatively.

These companies are expecting increased use of technology to manage residential and

commercial complexes once the Covid-19 crisis is over.

“The current crisis has brought to the surface the huge dependence on the manpower to manage

the operations. It should pave way for the need to have technology playing a crucial role in the

operations,” said Ramesh Nair, CEO, JLL India.

Realty developer Vatika Group that also operates a facility management outfit has provided a

majority of its workers — over 700 in total, mostly migrants — accommodation within its

township.

________________________________________________________________

PE companies, realtors may allow deferral of rent for offices

Other private equity players, such as Brookfield, Xander, GIC and Ascendas, are also

expected to adopt similar strategies, allowing rent deferral for a limited period to avoid

the invocation of force majeure clauses.

India’s largest office space owner Blackstone has held discussions with its largest builder

partners, including the Embassy Group, RMZ and Salarpuria developers, to create a strategy for

tenants that are either seeking deferral in rent payments or invoking force majeure clauses, three

people familiar with the development said.

Other private equity players, such as Brookfield, Xander, GIC and Ascendas, are also expected

to adopt similar strategies, allowing rent deferral for a limited period to avoid the invocation of

force majeure clauses.

“Private equity firms have held multiple discussions and sought legal opinion on how to deal

with a situation where tenants implement the force majeure clause,” said an official who is

privy to the talks. “The prevailing sentiment is that owners and tenants should sit across the

table and find a workable solution to avoid financial burden on any one party.”

Large tenants that have already paid rents for April are also in talks seeking rent deferral,

depending upon how long the lockdown period extends.

Blackstone declined to comment. Industry sources said the private equity company had already

garnered 60 per cent of the rents for the month of April from the properties it has leased out.

The lockdowns, in force since the third week of March, are expected to bleed businesses, with

several economists projecting FY21 GDP growth even below 2 per cent.

“We will work with the smaller players and others such as food court operators that have been

badly hit and rework some terms to help them tide over these difficult times. Otherwise, most of

our bigger tenants have already paid the rent for April,” said another fund manager.

In the past 10 years, commercial office spaces have seen investments of nearly $15 billion, led

by Blackstone, Brookfield Asset Management, GIC Pte Ltd, Ascendas-Singbridge Group

and Xander Investment Management Pte Ltd.

PE firms argue that since the servers of these companies were housed in the leased premises, the

tenants were continuing to use the space. The force majeure clause applies when the tenant is

unable to access the property or it is damaged due to a natural calamity.

Newspaper/Online ET Realty (Online)

Date April 14, 2020

Link https://realty.economictimes.indiatimes.com/news/commercial/pe-companies-

realtors-may-allow-deferral-of-rent-for-offices/75133034

“We are maintaining the facilities even though no one is coming to work or staff members are

working remotely. Most of the physical infrastructure of companies such as servers and other

assets are still housed in the buildings, and we have to maintain them,” said a senior executive

with one of the leading PE funds. According to him, the fund’s global experience shows that

this is a minor and temporary blip and most tenants are able to tide over it.

Builders are now relying on a Hong Kong court ruling following the 2003 SARS breakout. The

court had ruled that a tenant is not entitled for any relief. Another issue with most rental

commercial real estate owners is that they avail LRD (lease rental discounting) loans against

these rental incomes and unless the banks rework their repayment terms, they will be unable to

pass on the benefits to the tenants.

“It has been observed that while the larger, tier-1 MNC occupiers have not been requesting for

lower rentals, many smaller entities have begun this discussion with their landlords,” said Anuj

Puri, chairman, Anarock Property Consultants. “Office space owners have largely taken the

stance that while their spaces may currently not see employee footfalls, companies still occupy

space in terms of office equipment. The current phenomenon itself, while unprecedented, is also

seen as strictly shortterm and once the lockdown lifts, offices will start seeing employee

footfalls again.”

________________________________________________________________