Just when the real estate industry bodies had firmed up their public posturing to halt construction with allegation of cartelisation by the cement & steel producers, there was uneasiness at the developers’ end. Many of them had their back of the envelope calculation as to whether the construction strike would actually help or hurt the business. Track2Realty tries to get into the depth of the issue.
A TV debate after the Union Budget 2022-23 caught one of the IPCs (Independent Property Consultant) off guard when the anchor categorically blamed him for real estate not getting its due with the budget. In his defence he could only argue that it is not about one specific report but all the industry reports are guilty of creating such a goodwill for the sector. The satisfactory voices were so profound that the policy makers too found the business capable of self-sustaining without any fiscal incentives.
The Union Budget 2022-23 lacked any fresh ideas as far as the real estate in general and the housing market in particular is concerned. Most of the announcements are more or less the extension of the old schemes and roadmaps. The euphoria of the industry stakeholders ahead of the budget turned into a deafening silence in the next few hours of budget speech.
Tracking the sentiment is not that easy in the business of Indian real estate. There is no ideal predictive model that could assess the sentiments of both the developers as well as the buyers. The leading voices of the sector has never been very consistent with their budget wish list and the post budget customary note. The most important stakeholders, the home buyers, are more often than not completely ignored when it comes to sentiment assessment post the Union Budget.
The industry data of faster recovery and record home sales conceal more than it intends to reveal. The rosy outlook fails to address the fact that this is a K-shaped recovery where a handful of large developers with sound financials have grown at the cost of the large universe of the developers. More importantly, the sales registration data doesn’t differentiate between primary market sale and distress sale in the secondary market.
On the eve of every Union Budget the real estate stakeholders get into a huddle to set the narrative that could influence the fiscal policy. They are conscious of the fact that the business of real estate gets more affected by the fiscal policy than the recurring monetary policy that shapes the outcome of floating interest rates every now and then. A Track2Realty analysis.
Home buyers point out that it is not only lengthy litigation that defeats their cause but also the fact that the builder continues to challenge the orders of the District Commission in higher courts. Over and above that the builder can also file multiple false cases against the harassed home buyers. The home buyers hence demand that the way NCDRC admits the challenged judgment of the State Commissions on a case-to-case basis, the State Commissions should also adopt the same practice.
2022 won’t be an easy year for the average Indian home buyer in terms of making a conscious decision of buying a house. The fundamentals of the market and macroeconomic outlook indicates 2022 could be even more challenging than 2021 for more than one reason. The rising input cost of construction has put a serious question mark over the feasibility of the business in a price sensitive market. Many of the developers with thin profit margins are facing a catch-22 where the input cost hike is compelling for escalation but the demand side is not ready to absorb the hike.
Within the built environment of the Indian real estate there is still denial about too many parallels between the Indian and the Chinese real estate. Many even believe that the Indian economy is not that real estate dependent as the Chinese economy. Even when admitting the crisis in Indian real estate, it is diplomatically wrapped in the developer’s justification of not learning any lessons on part of the Indian developers.
Across the world the commercial real estate, most notably the retail and office spaces, have been hit the most due to Covid-induced new normal. It is hence being debated as to whether commercial real estate would be able to reinvent itself to remain relevant in the post-Covid world where the Work From Home and online shopping threatens to eat up the market share of till-recently lucrative business models of retail and office space. Track2Realty explores the need for innovation.