Is Indian Real Estate Approaching a Revival? Here are 3 Observations.

Is Real Estate in India on the verge of a great revival? The question plagues everyone I meet. Some folks act cool, some are visibly perplexed and then, there are some from the CSR divisions of respectable Indian companies, blissfully high. :)

Before I started putting this blog post together, I did an internet search on the revival of Indian real estate. The latest article, which appeared to have been published a few hours before this one was - 

'Modi govt makes the right moves to revive real estate sector: Crisil.' I quickly went through it and wondered why the article was published at all. Get there and you might feel the same way. There seems to be an information black hole about where the Indian real estate industry seems to be heading in the near future. Is Diwali the turn around date? Or is it the start of FY 2015? I am no authority on such a big issue but I can write down a few facts with reasonable confidence and offer my very own answers to those two questions which are rogering you right now. Stay with me please.

Observation #1: The scene on the street

Its bad. B-A-D. None of my friends from across the country are happy with their employment, remuneration, savings and their point of view on the near economic future. The wife works for a gigantic industrial company and salaries in their organisation are regularly overdue. Senior level executives are the worst sufferers. Entrepreneurs hate holding back on salaries unless they have no money. It should be safe to deduce from there and from numerous other cases we hear of, that most corporations are facing cash flow problems. It should also be safe to deduce that these 'cash flow' problems are not going to disappear in a hurry. Are any of these people going to make a real estate purchase any time soon? Highly unlikely.

Observation #2: But the stock market index is booming

Yes. So I have seen every other day in bold newsprint. My understanding of the stock market is pretty low (as in, almost zero) and I thought for the last two months that people who were investing in stocks were laughing all the way to the bank. So I finally asked someone who was pretty big in the stock scene and he told me that essentially, none of the scrips the average guy invests in was making any progress. The common man was losing money or gaining nothing even as the index breached all sorts of historic highs. I was left feeling low after that insight. I am open to comments and feedback from people who made real money out of investing in stocks lately. 

Analysts, like weathermen will tell you that this is all good in the long run, just like global warming, wars and social media business models. Its just that being a real estate guy, it tells me that no one is making money to buy that 2 crore 3 BHK apartment on the 18th floor of a housing society that has 3,000 apartments and promises to be that exclusive address you should die for. Ironically, for a revival to happen in Indian real estate, millions of square feet of such rare addresses need to be sold, and bloody fast!

Observation #3: Delhi NCR real estate is already reviving!

I have two words for that. B*** S***. Thanks. Delhi NCR is a region that has prospered and grown mainly because of the automobile and its ancillary industries. Has the auto industry been booming? Nope. Are they hiring new managers everyday who would line up to buy real estate? Nope. Are new production units setting up large corporate offices every month? Nope. Are the service industries making enough money to expand continuously in the National Capital Region? Nope. Are real estate sales tipping the scales now towards a revival? Probably not. And, if the banks eased construction credit and all the unfinished projects were turned into spanking new completed buildings, would that bring about a revival? Purchases bring about a revival. Not supply. 

Its time for a little story at the end of it all. I recently got an invite to the opening of a very fancy restaurant and foreseeing an opportunity to taste some exotic food I could not probably afford otherwise, I went. A really exotic looking dish was served and everyone tasted it and made seasoned faces of understanding, surprise and some even went 'Wow!'. It was my turn. I put a spoonful of it in my mouth and well, I thought it was the worst thing I had ever tasted. But I kept quiet and smiled. It must be an acquired taste, I told myself. However, I would not pay for that food in a hundred years.

But this is real estate. After giving half my life to this beautiful industry, I don't really need to acquire a taste and I can answer two questions for you right away with reasonable confidence;

1. When is Indian real estate going to revive? 

Answer: Only the one above knows

2. What is going to bring about this revival?

Answer: Prayers

And like my Guru (yes, I have one and he must not be named) says, it will eventually all work out. Always.

Cheers!

About the author

Rahul Mishra is a real estate professional who started his life as a salesman, selling homes in the city of Kolkata since 2001. He worked pan India in real estate organisations like MMG Realty, Bengal Shrachi, The Phoenix Mills and The Space Group before helping co found Pillars with a single objective - To make real estate easy!

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