OPTIMISM IS THE ESSENCE OF SUCCESS
“When the going gets tough, the tough gets going”, was the message the respected leaders of real estate conveyed during the Realty+ Conclave held in Mumbai. Like waves of the ocean, the real estate industry has a pattern of ups and downs. Those who have been in the business for long understand the current transformations as necessary for the sector and the resultant downturn a short term pain for a long term gain of the realty industry. THE SILVER LINING The taxations, lack of liquidity and stringent regulatory measures have slowed the sales in real estate but has also brought in consolidation. The unorganized players are setting their house straight or folding up and the consumer confidence is coming back. The strong companies are becoming more adaptive to the emerging trends and the focus is now shifting to other asset classes like student housing, affordable housing, shared office spaces, warehousing, data centers and industrial parks which till now, were not on the large developers radar. The financial crunch has forced real estate to become technology savvy. From developers and brokers to architects and contractors, tech has become an important aspect for faster project completion and achieving sales to gain cost efficiencies and raise profit margins. REMEMBER THE BIG PICTURE There is a strong basis for optimism. Every business goes through up cycle and down cycle. The real estate has already seen a prolonged down cycle and the reformative changes will now only take it upward. The lowering of GST, the taxation and home loan incentives for the homebuyers, the stress fund, relaxation of approval norms and incentives for developers in affordable segment are some of the measures that will bring cheer to the real estate. Exemption of GST on ready to move properties, means the ready inventories of developers are seeing a lot of interest from buyers, which in turn will reduce the vacant stock in all cities bringing in the much needed liquidity in the industry. Dr. Niranjan Hiranandani, President NAREDCO & Managing Director, Hiranandani Group cautioned the industry to not be bogged down by the difficult times. According to his analyses, real estate sector will grow by 30% in the next coming year. “The secret to success is innovation, to chart a different way to do business in the present market. Five years ago I was advised not foray in commercial segment as residential was considered “the space” to be in for any developer. But, today commercial segment is far outperforming the residential realty across the country. The moral of the story is that, we need to keep looking at newer avenues whatever maybe the popular trend. Real estate is one segment can never go out of business as there is huge untapped demand in the market – everyone wants to buy real estate, whatever may be the budget- affordable to luxury.” Some argue the policies have been too harsh on developers and builders in an attempt to patronize buyers. But, for an industry that is the second largest employment generator, it is important to function favorably for all. As Jaxay Shah, Chairman - CREDAI India & Managing Director - Savvy Infrastructure Pvt. Ltd rightly puts it, “Given the scale of impact of our sector, more support from the government agencies is critical. For instance, for a setting a factory, institutional loans are readily available but, unfortunately so is not the case for affordable housing project. Delayed government approvals & permissions increase project costs by 20-25% which are ultimately passed on to the homebuyer. Also, a standard 10% capital gain tax, will discourage black money stigma the industry is associated with. If the government wants to create ‘Housing for All’, it has to shun unnecessary steps that drive up project costs.” TAKING THE BIG LEAP Finance plays a huge role in developers’ project delivery, which trickles down to the buyer and his capacities. We as financiers have made sure to support the developers that we lend by making sure the projects were not stalled for financial issues. Given the slump in the market, we could not take on many new projects, but ensured the projects we were financing, moved towards completion without delays.” Industry leaders are confident of the bright future and are exploring every creative way to drive sales. Connecting with the consumer, getting the product right for the target market and deliverance of projects on time has become a priority. Elaborating on the new approach required from product design to marketing, Amit Wadhwani, CoFounder, Sai Estate Consultants Chembur Pvt. Ltd stated, “First & foremost, the products would now have to be designed not as per a developers fancies but as what the particular market segment needs. Focus is on architecture, the land, premiums, fungibles TDR, and getting costs down. The developers will now have to increase their in-house sales team including the contact center and CRM or engage a specialized sales & marketing agency. Additionally, digital space for a peer to peer review based marketing is far efficient than just outdoor advertising.” Finally, understanding the consumer behaviour, at newer products and observing satellite cities and investing into emerging economic hotspots and asset classes promises results for the future. Above all, sustaining in these testing times will weed out the tough ones to stand tall when the inevitable real estate growth returns.
Tags : Realty+ Connect Hiranandani Group Amit Wadhwani Jaxay Shah Niranjan Hiranandani Savvy Infrastructure Pvt. Ltd Sai Estate Consultants Chembur Pvt. Ltd