After Real Estate Regulatory Act Reality Ball is in Customer’s Court

Not long ago, property in India was a seller’s market. Developers, even the ones with a horrible influence owing to the quality of construction and delays, were never short of ambitious beaver consumers. Indians demonstrate the ‘roof over our heads’ ambition like few others. That meant only developers decided what the reality market wanted. They set the price of apartments, the size, and the designs. The buyer's choice was extinguished by demand burst.

Developers are right-pricing, right-sizing, re-designing, even delivering apartments on time. Also, discounts of 8-10percent, developers have taken to offering freebies such as cars, gold coins, furniture, and even free foreign tours to attract the property buyers. They are also offering payment plans easy and deferred. In some cases, the ticket or say booking amount has been sliced to as low as Rs 1. In other words, developers are giving miraculous attention to customer care. Buyers of property in India never had it so good. But consumers ends up buying only when they are guaranteed of correct pricing, product, payment plan, performance and most importantly, permissions from authorities.

King Customer

Constructing smaller houses without changing the per square feet rate is another plan of action that is achieving fame. By reducing the size of units, developers are trying to make the pricing attractive for buyers. What happened? Rising customer advocacy has played a critical part in the new business paradigm. The market of real estate in India has always had plenty of clients taken for a ride by immoral or say, corrupt developers and their functionality. But they never had an appropriate platform to seek compensation. The commencement of Real Estate Regulatory Bill has changed that. While a regulator under Real Estate Regulatory Act (RERA) is yet to be set up, the Act has already educated to usher in some form of transparency in the functionality and discipline in properties in India.

Consumers also determined to congregate and take on developers. Personally, they accomplished they could do little to the influence of developers and the battery of lawyers at their destruction. They have been approaching in the National Consumer Dispute Redressal Commission (NCDRC), Competition Commission of India and even the Supreme Court of India to explore recourse. Courts hopefully have sided with the consumers. In July, the Supreme Court of India asked Unitech to down payment Rs 5 crore by August 5, 2016, for delaying the accomplishment of a high-rise residential property Burgundy it had launched on the Noida-Greater Expressway near New Delhi. In a separate case, the Supreme Court of India asked Supertech to return money to consumers. Courts and various consumer forums have also governed against developers such as DLF, Jaypee Group, Unitech, Supertech, and Parsvnath Developers in recent times.

Authorize customers could not have happened at a more horrible time for builders. The real estate in India is choking for breath. Property Developers in India’s key property markets — Mumbai, Bangalore, Chennai and the National Capital Region are struggling with slow-moving demand a barrage of unsold properties and delayed or stalled inventories. Even easy payment plans, deep discounts, and freebies have failed to grow the sentiment of consumers. "Buyers of property in India confidence in real estate developers is at the bottom right now." Given that the reality market is inherently period, builders could have delved into and waited for the downtrend to pass. Not this time. Declining business has heaped on the debt of developers, mainly in Delhi and NCR.

The net capital of the top 13 listed developers followed by Kotak Institutional Equities locate at Rs 55,100 crore at the end of March 2016 correlated with Rs 50,800 crore a year ago and Rs 41,400 crore at the end of March 2014. Two real estate companies Unitech and DLF account for 56 percent of the total capital. The dispute developers, face now are unprecedented, according to developer Niranjan Hiranandani. The atrocious news doesn’t stop here. According to credit rating agency Crisil, top 25 real estate industries of India have as much as Rs 30,000 crore financing maturing in the immediate future. Rating agency India-Ratings Research has revised its outlook on the housing sector to negative for the financial year 2017 from stable. Developers cannot even hope for demand resurgence soon.

A report Knight Frank India shows new launches in the country’s top 8 cities fell 9 percent year-on-year during the six months to June 30 to less than 107,120 projects. It is the lowest in three years. Given the changed dynamics, builders have to adjust to the ‘new normal.' Apart from concentrating on customers, developers are also doing away with additional clauses that prevented the business process earlier.

Joining Forces

Some developers are work together with each other to bring inventories back to life. They have started to share the land, labor and other resources. Benga lure-based Cornerstone Properties, one of the large landowners in the city, has been developing residential and commercial properties by partnering developers such as Sobha, Mantri Developers, Embassy Group, and Brigade Enterprises. "The joint venture model helps developers concentrate on construction funding which is cheaper than the money for land acquisition."

These occurrences have happened at a time when projects are changing tack. Funds are to a greater extent investing at the inventory level in the form of structured capital, which is tailor-made to suit borrower’s needs, with less impartiality but gives lenders more control as they are unwilling to take significant risks on projects. "Investors now prefer to enjoy lower return but higher capital safety," says Shobhit Agarwal, Managing Director, Capital Markets and International Director, JLL India.

Businesses

Even so, cultivate the property buyers in India is the essential of the recovery strategy of the manufacturer. Builders have turned to social media to reach out to their promising consumers. Digital marketing is achieved acceptance with developers who have realized that buyers of property in India are finding it appropriate to analyze various options basically before physically inspecting out the short-listed properties in India. After the real estate regulatory Act, property buyers in India get an appropriate platform to put their concern, and they believe that his or her concern is in a good pair of hand. The property buyers are having the last laugh, it seems.

Rahul Singh, the author of the above article, is working in a real estate firm offering services related to the Real Estate in India.