Realty Rewind!

January 09, 2010

Vinod Behl

The year 2009 will be regarded as a unique year for the Indian realty. A year that brought both despair and hope. The real estate boom that went bust in 2008 saw real estate players, investors and property consumers experiencing its pain with the onset of 2009. The global economic slowdown added to their woes. But then, luckily this pain, much against expectations did not last long. The second half of the year brought in a glimmer of hope. In the third quarter, there were clear signs of realty revival while the fourth quarter has brought the much needed relief to the real estate players, with demand for property picking up.

The government played its role to revive the ailing real estate sector through its well thought out fiscal policy and supporting stimulus. While the real estate is now out of the ICU, it is clearly yet not out of the hospital. Therefore if the recuperating real estate does not take proper post-operative care, it runs the risk of once again slipping into serious health problem.

It is equally sad to see a section of the industry blaming global economic slowdown for the crisis that plagued real estate sector. The truth is that real estate bomb was ticking away and the bubble was just waiting to burst. The global economic crisis only made the matters worse for the real estate market.

It was the case of killing the proverbial goose that laid the golden eggs. The sheer greed of the industry players was what led to real estate fiasco. They resorted to overkill with mad frenzy to build homes, offices and shopping centers and even taking to land hoardings. They further spread it thin by moving into non-core areas. By kicking up speculative buying frenzy, they prepared a sure recipe for disaster.

It is high time the real estate community mends its old wayward ways and puts its house in order. The boom period saw real estate developers dishing out what they wanted to serve rather than what the consumers needed. Fortunately, many of them have now turned to affordable housing which is in great demand. By moving out of the non-core businesses and making their operations cost effective and efficient, they are making serious efforts to put their business back on rail, though funding and execution challenges still remain.

That the pain did not last for long, may well have worked in favour of the real estate sector. But then there is an inherent danger in it as many players may not draw any lessons from the real estate bust. Instead, they may well be back to their old ways that led to speculative buying frenzy and property price bubble.

One hopes that the real estate sector emerges from the crisis. Let the bitter memories be a thing of the past and the New Year bring in sanity, paving a way for systematic and sustainable growth of real estate in the months ahead.

Source : www.realtyplusmag.com