Indian Real Estate - 2015: Forecast and Four Last Tips

IREFD wishes all its readers a very Happy New Year! 

2014 is done and dusted. Phew! A lot of us are feeling that way. Indian Real Estate is probably at a very low point right now. Every month, we get a handful of emails from people who come across this blog and feel the need to criticize, correct or praise IREFD. Some even consult us on various real estate issues. These direct and honest interactions we have with our readers reveal a trend that is true and reliable. For the last few months, despair, helplessness, cash crunches and zero sales have been trending across India's real estate markets, irrespective of the Tier of the city. 

How did 2014 treat India's Real Estate Industry?

#1. If you wanted to buy real estate you finally liked, you probably could not afford it. What is worse is that 90% of buyers out there now think that these asking prices are crazy (yes, just like highway robbery) and that real estate prices need to/ will/ should crash now. As a buyer, you now feel that you have had enough. That is bad news.

#2. If you are building/ selling real estate in India, 2014 had very little good news for you. The year started out with some hope as a few sales trickled in. The pre General Election slowdown was something you were ready for and the post Narendra Modi swearing in euphoria was very short lived, if you felt it at all. When Bird Flu hits the land, even KFC struggles to sell ladles, let alone buckets. So whether you are a one building old builder or DLF, you struggled right through 2014. Your cash situation is probably at an all time low and you can't really see any respite in the near future.

#3. If you are an analyst, you are having a field day. You told the world in the beginning of 2014 that this was the year of miracles. Once India swore in her new Prime Minister, these reports looked more and more like my daughter's upper infant progress reports. All As and Bs. 2015 will see you publish a whole lot of new positive stuff. And that is good because leaders are merely dealers in hope. :)

2014 Trending Words: Indian Real Estate - Cash Crunch, No Lease, No Demand, No Credit, Work Stopped, Helplessness, Falling demand for Commercial and Retail Spaces, No investors, Hey Where is my Money.

2015: What is in store for Indian Real Estate?

With the core Indian industries stagnant or recovering; new jobs, salary raises and expansion plans are on hold, idefinitely. Survival, debt repayment and good health now far outweigh expansion and diversification when it comes to short term organisation goals. That is bad news for real estate, across all asset classes. 

Considering that everything is being set right by the new government even as you read this and that the self proclaimed good days are coming, a revival in the real estate markets will take another 2 years. Minimum. If the invisible work up there is not significant, a healthy demand for new real estate in India will take another 4 years to show up.

If the situation turns around before that, it will be great for all of us but it makes sense to be prepared for the worst. 2014 has taught us that. Those of us who were looking for some sort of positivism in 2015 are still groping thin air. So far, as I write this, nothing positive has floated up to the surface.

2015: 4 Things to do to help the Indian Realty Market recover!

#1. Speak the Truth

Sellers: Stop masking your super tight cash flows with words like 'Last few Left', 'Hurry', 'Prices Going Up Soon' among other bizarre terms your ad agency comes up with. It is time for you - the owner, to act. Call up your investors, call your prospective buyers for an evening of conversation over good food at an economic place and tell them the truth. Tell them why their projects are stalled or delayed. Tell them you need their confidence now. Ask them for faith, help and give them a true and solid way ahead plan. I am saying this because I have done it in meetings filled with disgruntled home owners crying for blood and I have always walked out with their support. Humans can amaze you if you stop lying to them.

Buyers: Stop window shopping if you are not serious. Resources at the sellers'/ brokers' ends are at an all time low and you will be respected if you understand that. Keep your price expectations real. Just because it rains diamonds on Neptune (that is dependable information) does not mean they should now sell diamonds on earth at half the price. Get it? A builder right now is going through a lot to keep his commitment to you. Its absolutely fine if you, the buyer have to go a little out of the way. In fact, you should gladly do it. The company you are coding for could be a leader in home automation systems. That is just to make you see the reality of this huge eco system.

#2. Stop all Unnecessary Spending

What is unnecessary? Everything that you are going to lose anyway pretty soon. Might as well drop the extra baggage now and look like a smart guy later on. Don't worry, most of your peers are waiting for you to start and they will all follow.

#3. (Re) Design and Build Affordable Real Estate

There is a swelling gap between what is being built and what is in demand today. Builders, brokers and consultants should work towards accepting this fact. (We could not imagine a life without Orkut a few years ago. It was the rage. Today Orkut is dead and buried, so trends do change. Accept change. Evolve. Or perish!)

#4. Stop Expecting

Building positive bubbles instead of executing points 1 through 3 will be akin to digging your own grave. The smart folks in Indian Real Estate did not put any new good money behind bad money in 2014 despite the highest ever pressure meter readings. Those of us who were expectant and continued to deploy resources in the wrong direction should stop doing so right away. Set weekly and monthly 'to be achieved' goals and meet them. 2015 should be lived off the land, without expecting any back up to arrive. 

-- About that Image Above --

Sometimes, the most beautiful things show up when you least expect them. Scroll up and take another look at that image. It is an unedited picture of a single point perspective art installation! This is the work of Georges Rousse, a French artist who has been creating his painted perspective installations in abandoned and soon-to-be demolished buildings since the 1980′s. Some of his works have turned decaying real estate assets into icons of beauty and hope. 

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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