Track2Realty Exclusive-Yearly Analysis: Realty sector may appear to be bullish and project that downside is over with rosy forecast ahead, yet the decline in fortune is far from being over. As a matter of fact, the learning in the last four years has forced most of the leading players to restructure their project portfolio and shed the flab.
With cautious optimism, while the leading players have refocused on their core expertise area and selling land bank, others are restructuring their team & overall strategy. As a result, though distress sale may not be a norm in the year ahead, collapsing dreams of developers have definitely changed their aspirations and business model.
The year 2012 will be by and large seen as ‘the year that has gone waste’ for the Indian real estate. Weathering the storm during 2008-10, the sector had an year of experiment during 2011 and just when it was believed that things are poised to fall in place with the business, a number of developments, some forced ones and others self-inflicted ones, put the developers back on square one as far as revival of the fortunes is concerned.
It was not just a year that has gone waste for the realtors alone, the government too seems to have wasted the year to help organize the sector with a number of reforms oriented measures, most notably the regulator bill. Due to the centre-state bickering, and the overall political climate, with the exception of Land Acquisition Bill, no other bill could be taken up for discussion in the House.
Funding agencies too seem to have wasted the year in anticipation of a revival in the leading realty micro markets, rather than putting in money where the real demand exists without supply mismatch. Many of them are exiting the Indian realty now, without realizing it has been equally their fault to back the wrong horses in the Indian market.
Last, but not the least, it has been a year wasted for the home seekers whose wishful thinking for a price crash just remained a wish and even though property transaction nosedived in most of the major micro-markets, prices kept appreciating.
On the eve of 2013 the picture in front of the Indian real estate is pretty much confusing—with sales nose diving, debt piling up, new source of funding dried up and share prices way below the listed price, real estate companies are in a desperate situation and each one seem to be devising its own cost-benefit analysis to come over the tide.
Sanjey Roy, DLF spokesperson, sounds optimistic when he says outlook for year 2013 looks optimistic but then the sector is not disconnected with the overall economy. He suggests the RBI to kick start the economy that will also help the sector’s prospects.
“I feel the ball is in the court of the RBI and once there is cut in the CRR and repo rate, it will automatically bridge the demand side deficit. I don’t think there is any supply side deficit and developers are getting ready to deliver a number of projects in the year ahead. This year the biggest dampener had been the high interest rates,” says Roy.
…..to be continued
