What Can the Builders Learn from the Real Estate Scenario of 2019?
Dec 27, 2019 Real Estate News
The real estate sector of the country has been suffering for a while, and it has taken a toll on the builders. The rapid sales and demand for real estate projects started to decline after 2013. The introduction of RERA, GST and other laws relating to real estate has severely hit the sector. The potential buyers are now the fence-sitters and are waiting for the right time to invest in the real estate sector. If the builders were looking forward to some relief and improvement in sales in 2019, they were let down by the crisis involving the non- financial banking companies that started in late 2018.
With banks being extra cautious of who they are lending the loan to, the builders are left to deal with the financial crunch by themselves. RBI has laid down laws to make sure that the money that the homebuyers invest is not misused. A large number of NBFCs are now on the verge of shutting down which has further put the builders in an odd position. The times are hard for the builders, and it is the survival of the fittest scenario. The one with the most substantial financial backup and trust from the banks and homebuyers will survive this wave.
Here are the lessons that the builder should learn from the real estate sector in 2019:
Slowing down with the project launches: A decade back, the builders came up with new projects now and then. The severe shortage of financial capital and less buyer interest has put many projects in jeopardy. Many prominent builders have filed for bankruptcy and insolvency, and several projects have been abandoned in their under-construction stage. The biggest lesson a builder can take is that they need to slow down with the number of project launches. Focusing more on the current ones will help them not only to complete the project on time but will also show their dedication towards a project garnering interest from the homebuyers.
Sell the unsold inventory first:
The money crunch in the real estate sector is the reason for many builders finding it challenging to complete a project or launch a new one. To help with it, it will be wise for the builders to sell off their unsold inventory first and then start new projects. Due to demonetization, RERA regulations and GST, the buyers are sitting on the fence waiting for the right time to invest in the real estate. However, the time is most suitable right now with banks offering reduced home loan interests to get the attention of the homebuyers. It is also a good time to sell off the entire unsold inventory.
With banks being extra cautious of who they are lending the loan to, the builders are left to deal with the financial crunch by themselves. RBI has laid down laws to make sure that the money that the homebuyers invest is not misused. A large number of NBFCs are now on the verge of shutting down which has further put the builders in an odd position. The times are hard for the builders, and it is the survival of the fittest scenario. The one with the most substantial financial backup and trust from the banks and homebuyers will survive this wave.
Here are the lessons that the builder should learn from the real estate sector in 2019:
Slowing down with the project launches: A decade back, the builders came up with new projects now and then. The severe shortage of financial capital and less buyer interest has put many projects in jeopardy. Many prominent builders have filed for bankruptcy and insolvency, and several projects have been abandoned in their under-construction stage. The biggest lesson a builder can take is that they need to slow down with the number of project launches. Focusing more on the current ones will help them not only to complete the project on time but will also show their dedication towards a project garnering interest from the homebuyers.
Sell the unsold inventory first:
The money crunch in the real estate sector is the reason for many builders finding it challenging to complete a project or launch a new one. To help with it, it will be wise for the builders to sell off their unsold inventory first and then start new projects. Due to demonetization, RERA regulations and GST, the buyers are sitting on the fence waiting for the right time to invest in the real estate. However, the time is most suitable right now with banks offering reduced home loan interests to get the attention of the homebuyers. It is also a good time to sell off the entire unsold inventory.
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