Real Estate Post Lockdown 2 !

 

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“When you work on something that only has the capacity to make you 5 dollars, it does not matter how much harder you work – the most you will make is 5 dollars.” … Idowu Koyenikan.

 

Idowu Koyenikan is an “internationally acclaimed organizational consultant and author” - USA TODAY NETWORK. Idowu help individuals and organizations break through to new and higher levels through strategic planning, training and coaching. Well, though I am not much of a finance or economics person yet I am in business, that too like real estate & in our country the business faculty don’t have much respect or recognition, unless you are tagged with some political party’s close one! That’s why nobody pays much attention to such wise words of Idowu which has helped USA to become a business power across the globe with nearly six out of top ten companies are USA based & it’s not fluke or accident but strategic planning towards the business & industry which has made USA or say countries like Japan & Korea to achieve this. Well, when the business arena is in our country & the industry is real estate, less we speak about strategy & planning, is the scene which even big players in real estate accepts! Joke is, with all ups & down yet real estate is always talk of the town & may it be a town or mis segment city or a Metro, everybody (even the govt) wants to be associated with this industry though when it comes to share the problems, nobody wants to be part of it but everything (read as loss) is dumped on the builder’s head, is also a fact!

We are now in post second wave of world war (read as  pandemic) & again life seems to be coming to normal (that’s one good thing about our country), restaurants are full, tourist destinations are overbooked & flights are packed. All these are sure signs of things coming back to normal for the business barring a few (& for a few, its start of 3^rd wave) & real estate is no exception to it. And indeed, that’s best way to overcome adversity as now the biggest enemy is not some virus but the fear about future & toughest task is survival & both these factors gets best out of a human being is a basic law of human behaviour! All one has to do in present times is, stay focused & not get carried away but for real estate the challenges just don’t end with fear of future & survival but one more added factor is there & that is “Mai Baap” govt’s attitude which gets reflected in the policies related to this industry! And here again no govt even when Hon Cm was having Urban Planning dept with him dared to take bold decisions which will revive or make real estate flourish once again.

Because the basic problem with the govt is it works to please the masses & masses are always against the builders even though they accept (at least now a days) that it’s the builder which only builds the homes for the masses (read as all types of home buyers) yet the builders shouldn’t make money while doing this as they have made & are doing loads of profits is a basic assumption & making huge profits is a crime in our society! Though the very same society celebrates when Blue Chip companies makes huge profits & declares dividends or bonus in their annual financial results & stock market goes souring high with such results but not the builders. May be its because most builders are individual or family run business & people won’t like money getting accumulated to one person or the family but then such is the nature of this business that’s why there are not many corporates in real estate, right? Rather the govt should think of why there aren’t many public limited companies in real estate as well why those which were there have gone down bank corrupt (most of them), the answer is because of the nature of this business & policies related to it!

Right from getting a clear title land to uncertainty about the rules & regulation to no control on any of the prices related to raw material like land to material to labour to delays caused due to issues like fights over authority of plan sanctioning (Take example of merged villages in PMC) to development plans delays & then Unified Development Control Rules to clash of different departments of the govt making projects stopped, the list of hurdles for real estate business is endless! And such kind of business is always going to be like steering a ship in the storm where the captain can be only one, means no corporate decisions are going to work where board of directors are involved in making any big decision as every decision is of life & death in the real estate is a fact! Many will say, whatever I am talking is just justification of the way this industry is being run but then I can be wrong, what about the facts that there are not many successful Public Limited Cos’ in the real estate for decades here, even when the business was in full bloom, if anyone can enlighten me, I am ready to take my words back!

Ok, now coming back to journey ahead, let me tell you up-front our Hon PM has been successful on one front & that is keeping rates of the houses (in many Metros) steady which is directly can be said as the home rates has been reduced. Reasons may be any but the home rates are either stagnant or increasing in tune with other commodities which wasn’t the case some five or six years back. And this is exactly what the real estate players has to keep in mind, at the same time customers are becoming more & more demanding (anyone who deals with redevelopment ask him or her), today’s landlords are ready with all the calculations except investing the money in the project & ends up as biggest gainer in real estate. Second category is Banks or financial institutes which gets from both ends i.e., project finance (if you are lucky to get one) with double interest rate than home loans & home loans for the very same project, aggregating the rate of interest for some projects nearly 30% per annum, this is sheer logic I am sharing as I am an engineer & not a finance guy as stated earlier! Thankfully the loan sharks (investor) are out as they are the first who knows a dead fish without flesh & blood which real estate has become. This doesn’t mean there is no money in real estate, this means every day is not a Sunday anymore as earlier wherever you build & whatever you build, one used to make huge money (read as investors if not the builder) but now only if you choose wisely & build more wisely only then you can make some money. Third gainer is the govt as for them real estate was & is milking cow, so the amounts you pay to get all the sanctions (read as in the form of challans to govt only) are getting fatter while the quantum of FSI coming in market is all time high, means more supply which is directly related to reduction of rates, right? And lastly the latest gainer in real estate are the clients i.e., the flat buyers, as with more supply of homes & lesser (or no) finance avenues, the flat buyers also has learned to smell the kill & just like the way negotiations happens on readymade clothing merchant’s stall on footpath, whatever price you tell the client starts from 50% of it is the trend in the real estate! Oh yes, the increased labour & material cost is one more factor (challenge) ahead for real estate but I won’t say the vendors & contractors are gainers as they also have to share the heat which real estate is facing!

And I don’t blame any of above category as this is outcome of our (builder’s) attitude towards our own industry by which we only never have been professional in dealing issues related to us, so how we can expect other to think from our vision about the same! Though post second lockdown many changes are being seen, people have understood importance of owning a home as that’s most secured place for any human being or a family. Another aspect is, real estate obviously grows only in the towns or the cities with basic infrastructure in place like public health & social avenues & on the background of pandemic, this aspect will lead to generate more migration from villages or less developed regions to developed regions like Pune & there will be huge demand for homes, only thing is we should be able to deliver as per the demand & not as per our whims! The lockdown has hit many segments barring the service segment & it will affect budget provisions for the home for most of the families. One hint of caution for the flat/ home buyers too, in the present times do mind, not always the builder who negotiates best (read as, gives maximum discount) ends up as the best home maker as you are buying a home & not some vegetables or dry fruits, please do mind! So, the builder fraternity, get ready to cope up this challenge of delivering homes with fighting all above categories as do mind, everybody is in the race of survival here, even the govt & as Mr. Idowu quoted you must learn to make your share of what you are producing (read as building) than just cursing you bad luck or hoping for a miracle, that’s what will make you a successful builder & not just a builder!

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Sanjay Deshpande

Sanjeevani Dev.

 

Please view my sharing about real estate in Pune at You Tube link below...

https://www.youtube.com/watch?v=g4xX7eopH5o&t=5s

 

Please do visit my blog links below to read about real estate & home buying! 

https://visonoflife.blogspot.com/2021/01/post-lock-down-real-estate-home-buying.html

http://jivnachadrushtikon.blogspot.com/

 

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