When the Government of India was announcing relaxation with FDI norms a day ahead of Diwali, many analysts thought it to be a Diwali gift for 15 core sectors that could also prolong the festive spirit for the real estate sector.
A few may have succeeded but most of the developers have failed to position themselves right during the slowdown. In the process Track2Realty finds that the brand realty has taken a severe beating, losing the trust of both the end-users and the investors. The brand positioning that differentiates between the two different realty companies is today negligible with developers’ focus to sell. That, unfortunately, is not working for them and commanding premium over the brand reputation today is a far cry. Our team speaks to a cross section of developers, analysts and brand experts who may differ with each other but nearly all agree that sector has to come out of the Catch 22 situation.
From being the governance wild child to maturing into a market influencer, India’s real-estate sector has transformed in the past decade, with a paradigm shift from family owned businesses to corporates along with a few companies listing on stock exchanges. The change began with the government opening doors to Foreign Direct Investment (FDI) in 2005 and then welcoming the next wave of stability as corporate houses brought image restoration for the sector. Led by corporate entities, realty companies soon adopted corporate governance wherein transparency began to trickle down into the system as a norm slowly.
In the evaluation of sustainability of a housing market, the absorption of office space is the prime indicator across the world. After all, it is the economic activity and the job magnet that fuels the demand for new houses. The city of Mumbai has always been blessed on that count due to demand and supply dynamics.
Some key findings that indicate the aspiration quotient and standing of the Indian real estate:
88% Indians find real estate is still best asset class to invest
72% believe pre-launch or early stage of construction is best bargain
78% maintain upcoming locations give better returns than prime localities
84% homebuyers are sulking & repent their home buying decision
46% homebuyers have too serious issues with the developer to reconcile
The idea of creating a new city as a counter magnet to Mumbai was originally envisaged in the Regional Plan of Mumbai Metropolitan Region (MMR) in 1965. The actual planning process of this new city began in 1971 after the formation of CIDCO, a Government-owned company for development of cities.
The stock market is not only showing the investors’ confidence index going up. It is also indicating the way forward for the Indian real estate. After all, investor sentiment on the bourses have often led to the recovery of the real estate market as the investment grows to the next level of confidence for a long term investment. It may be too early for concluding whether the stock recovery is here to stay and lead to revival of the fortunes of the real estate, yet Track2Realty finds the debate has gained ground. While the developers are optimistic about the money sooner than later coming into the sector, the critics have their own reasons to advice wait & watch policy, if not outright denial.
Track2Realty Exclusive: The property markets of the financial capital Mumbai and the political capital Delhi has always been exposed to the reality that it is the expat Indians, the working class professionals, who are the key demand drivers of property. However, in the last over a decade or so this outlook on the migrant work force has become a pan-India phenomenon.
Track2Realty: RICS, along with 61 professional bodies from around the world, has called for setting uniform measurement standards for residential sector globally (including India) to bring clarity on measuring various aspects of property measurement such as super built up area, built up area and carpet area.
Track2Realty: Smart Cities: The New Age Concept: The smart cities concept may not be a novel one, but in the Indian context it is definitely an idea whose relevance couldn’t have been better timed. The government has provided the thrust towards development of such cities, and needs to be now backed by a holistic concept.