How Real Estate Advisors Can Act As Change Agents For The Sector
It's not only real estate developers that are facing difficult times due to a slowdown in the sector. All associated industries and services, too, are feeling the pain of a continued sluggishness in the real estate sector. Among the stakeholders who are eagerly waiting for the recent government moves to revive the sector are real estate advisors. In many ways, they could be equal partners in bringing about a turnaround.
How things stand
According to 'Realty Decoded, Q4 FY16', a recent PropTiger DataLabs report, property prices across the nine major cities of the country, barring a few, have seen a drop. On the other hand, overall sales figures have declined four per cent from the previous quarter. The nine cities covered in the report are Ahmedabad, Bengaluru, Chennai, Gurgaon (including Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (including Navi Mumbai and Thane), Noida (including Greater Noida and Yamuna Expressway), and Pune.
How could real estate advisors help?
While it may seem like a challenge, the present situation actually gives property advisors the opportunity to help the sector raise the sales figure in the near future. By explaining to buyers the several benefits of investing at a time when property prices are down, home loan interest rates are comparatively low and discount offers are aplenty, real estate agents can in their own way make buyers leave the fence and actively participate in the market.
The DataLabs report also shows that 97 per cent of the residential demand during the quarter came from end users. Further, the affordable housing segment consistently accounted for over 50 per cent of the total sales across cities.
Opportunity in current inventory levels
Developers, sitting on huge inventories across cities, have been offering attractive discount on home sales. This is why end users are already coming back to the market. The truth is, what stands as affordable in huge quantities at present, may soon start disappearing from the market.
The report also shows that owing to the huge inventories that developers are sitting on, new launches in the fourth quarter saw a 14 per cent decline over the previous quarter and 51 over the same quarter in FY15.
By helping buyers take informed decision, property agents can help developers clear their inventory and pump in the much-needed liquidity into the sector.
Bridge the communication gap
It is a fact that their inventory has been keeping developers on tenterhooks, but it also true that there is only a fixed amount of discount that they can offer; they have to protect their bottom lines as well. A communication gap may have led to both developers and buyers sitting in a wait-and-watch mode. With the expectations of a revival around the corner, developers may actually raise property prices in the coming future, even as buyers keep waiting for further price reductions. Property advisors could help both home buyers and developers by communicating the right status of inventories and prices.
The DataLabs report predicts strong long-term growth prospects for the residential sector, and adds that affordable housing supply and demand could see growth in the short to medium term, due to various measures announced by the government in recent past.
Hard data to show
Consumer is the king, and showing him the real picture based on true data could alleviate the fears on future prospects of investing in real estate. Property advisors, armed with facts and figures, could convince buyers that amid rising income levels and appreciating growth figures, any investment in the sector is sure to earn good returns in the future. (According to International Monetary Fund, India's economic growth is expected to be at 7.5 per cent in FY17, against 7.3 per cent in FY15).
The PropTiger DataLabs report also predicts “fundamental changes” in the sector after the Real Estate (Regulation and Development) Bill, 2016, is fully implemented. (The government recently notified 69 of the 92 Sections of the Bill.) This, the report says, will augur well for the sector in the long term.
The Real Estate Regulator
While the new real estate law will give property dealers the opportunity to rebuild their image, it will also recognise their role in shaping the sector. This will further help build better trust among home buyers, developers and property advisors. This presents brokers with a great opportunity to come up with better services and attract more and more buyers to the market.