The Untold Story of Property in India

As we are aware, Property in India has been reeling under a severe slowdown for the past few years. The positive sentiment in the Indian economy has not done much to boost the real estate spirits. One of the main reasons has been the liquidity crunch due to the crackdown on black money in last two years, a significant source of capital for the real estate in India. The real estate developers have lived with the idea of taking the individual investor for a ride for far too long and the belief that they can get away with anything. With almost all cases in court going against the builders has been a wake-up call for them and have emboldened the unsophisticated investors to knock on the court doors for justice. The developers need to take a few steps back, introspect, adopt best trade practices and come clean, in case the Property in India is looking at a revival.

Delayed timelines and delivery schedules have become the biggest pain point not only for the buyers but also for the real estate industry, which is losing its little-earned credibility fast. As per the latest report, more than 50% projects are going to miss their target dates across the country. The delays range from 1 to 4 years. Overestimations of demand, increasing costs and lack of market liquidity have led to surplus inventory. However, this factor of excess stock needs to be understood in the light of the fact that almost 80% of the inventory is under various stages of construction unless completed most of it would remain surplus; this has become the single point of failure for the real estate industry.

 

Significantly, the smaller builders are doing much better as compared to the bigger names. Reason being that the lesser known developers have handled one project at a time, completed it, given delivery and then initiated a new one. Whereas, the most flamboyant ones have failed on account of undertaking some projects; the drying up funds due to various reasons led to slow pace of construction and a few projects stagnating. At present there is now a clear solution to this logjam and the only possible result is going to be a few big ones sinking.

Unfortunately, it is the end-user who has put in his hard earned money, picked up a loan and dreamt of owning his house which ends up suffering, hoping to see some light at the end of the tunnel, which at present is non-existent.

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