[INDIA REAL ESTATE NEWS] Good morning everyone I am Rumi Dhar from Kama Group.|
Here I have important INDIA real estate news to share with you which is as mention under.
In my May 12th, 2020 column “The Mumbai real estate bumper sale has begun” I had
announced that home prices in the city had started to cracked sharply. Finally. Skeptics had
then doubted the possibility that home prices would fall. It wasn’t hard to blame them. The
ability of developers to withstand all previous shocks and constantly keep a positive narrative
going had convinced many that real estate prices in Mumbai could never go south.
Then it was predominantly the resale market driving down prices with the primary market not
falling as much. This created a reasonable price gap between resale prices and developers’
price in projects that still had unsold inventory.
As I have been visiting projects in recent months it is clear that the price gap between resale
inventory and developer inventory has narrowed sharply. The only game in town today is
pricing and it is no secret that most developers have slashed prices. And some have done it
to levels which were frankly unthinkable even six months back.
Why did developers bend this time?
At a recent event I was asked a question that is now commonly posed “After withstanding
many shocks over the years and still holding on to prices, why did developers bend this time
and cut rates?” It’s a fascinating question and there are multiple answers to it but in my view,
there are three core reasons.
The first is that COVID-19 brought such a hit in the resale market, especially among investors,
that it would have been impossible for developers to clear their inventory had they stayed
their typical course. Besides as some builders lowered their prices, others had to follow suit to
remain competitive. The second reason is that access to capital and funding was anyway
curtailed prior to COVID-19 due a variety of reasons including the NBFC lending crisis. In
order to raise capital and execute projects as per RERA timelines once COVID19 struck –
revenues from customers had become even more important.
While there is complete merit in the two reasons, in my view it is the third reason that forced
developers to acknowledge that their time was up. And that reason is the clarity with which
the Central Government made its intentions clear to the real estate industry. Prime Minister
Modi has not hidden his view on the poor functioning and discipline of the players. Yet in my
conversations then with several developers, in their eyes it seemed a one-time restructuring
package that would bail them out – was on the cards. It seemed a strange hope to have if
anyone was paying attention to the persistent messaging of the central government.
Read more at: https://www.moneycontrol.com/news/business/real-estate/did-the-modi-government-force-mumbais-real-estate-industry-to-go-aatmanirbhar-6223421.html
Have a nice day