4 Players That Drive The Real Estate Industry
Real estate often constitutes a large part of the total wealth of people, especially those who are home owners. When you buy a property, you acquire an asset that would possibly last your lifetime, or even longer. Whether you are an investor, developer, corporate occupier, or end-use owner of a residential property, you find the real estate sector a lucrative avenue to put your money in. Therefore, it is imperative for the four major stakeholders without whom the sector cannot function properly -- investors, end users, developers and corporate occupiers -- to study the real estate industry well.
Let us take a look at each of these players, to understand the sector better.
Real estate investments have caught everyone's attention in the past decade. Investors generally invest directly in real estate. The size and scale of the real estate industry make investing in it attractive and profitable for investors. Investing directly in real estate involves purchasing residential or commercial property to use as an income-producing asset or for resale at a future time.
Interest rates, demographics, general economic conditions and government policies influence real estate investors. It is not easy to estimate the return on investment in real estate. But investors still have a strong preference for the real estate sector, because they want to see their assets growing in value.
Like in all sectors of the economy, the customer is the king in real estate, too. He decides whether or not the venture of an investor or a developer will be successful. A buyer purchases a property when it meets his needs. To earn more profit, the developer needs to offer a better deal to the consumer.
If the consumer feels that the developer has defaulted on the contract, he often has to make rounds of consumer or civil courts. At present, the absence of standardisation and lack of adequate consumer protection constrain a healthy and orderly growth of the industry. But this is likely to change very soon, as full implementation of the real estate Act will enable the consumer to approach the real estate regulator for a grievance redress.
The Real Estate legislation aims to protect the interests of buyers/consumers and bring in more transparency into the sector. It will make the operations of developers more transparent in an industry that was so far largely unregulated in India.
In India, real estate developers meet the important needs like providing infrastructure to serve a growing economy, in sectors like housing, office space, retail, and entertainment. They play a key role in the real estate sector by bridging the gap between the construction facility and the consumer's need. They offer value in terms of design, cost, functionality, and location.
Real estate developers build for commercial and residential purposes. Most of the big names in the sector are interested in developing big housing complexes with well-furnished flats. Housing is the prime focus of most developers, partly because it meets the needs of the common man and partly because home buying is a common way to invest in real estate.
IT parks, boulevards, and retail shops are commonly preferred commercial projects. Offices for lease and rent are easily available in these locations. Such projects may not directly meet the needs of masses, but they do meet the needs of commercial players. Developers also do the marketing for their properties and attract many industries to set up businesses in them.
Corporate occupiers in India continue to be focused on connectivity, accessibility, and overall infrastructure quality. A key challenge for developers is to build properties at competitive prices, in areas that are attractive to customers. Most occupiers sign a deal on the basis of these aspects.
In Indian real estate, foreign players are among the prominent corporate occupiers. With lifestyles in India changing rapidly, easy access to talent, low-cost real estate, a fast transition towards an organised space and a good location are what foreign corporate occupiers find the most appealing here.
Improvement in physical and social infrastructure enhance the attractiveness of the existing properties and allow the formation of new office corridors.