What Recent Fiascos Teach Builders?
The great fall of the giants stands is an example for those who have been able to survive the winds of change in India's real estate. At a time when several sector biggies are staring at the possibility of going insolvent, those who have somehow been able to “manage” cannot thank their stars enough. However, their survival may not be the result of the right placement of stars, so to say. It is more about what they did or did not do in the past that might have a decisive impact on their present and future.
How far do speculations take you?
At a time when the property market was at its peak and developers were riding high on the “boom” wave, Unitech had bought 14,000 acres of land across the length and breadth of the country. This was done with the hope that the sector was going to scale new highs in the times to come. This is before the year 2009 came and the great fortunes of the company started depleting. Today, two of the company promoters, Sanjay and Ajay Chandra, are in jail and are desperately trying to find investors to arrange bail money – the Chandras have to deposit with the Supreme Court Rs 750 crore to make bail; till then, they have to do time. There are lessons developers can learn from this real-life story.
The case of Jaypee is not much different.
Several projects were launched by the group in Noida, with the hopes that properties in this affordable market of the national capital region would sell like hotcakes. The fact is that it did. However, the cash-hit company is now finding it impossible to deliver what is promised to do.
There is no way to predict markets movements of future. The least you can be is be close to being right. Hitting the nail right on the head all the time is something unusual and hardly seen. Making large-scale investments based on your own “gut feeling” or on expert opinions is certainly not the right thing to do.
How justified is your dependence on easy finance?
But, much worse would be to over-estimate your own potential to perform and to burden yourself with loans. Financial institutions back you up after assessing your performance capabilities. In case of a performance failure, they would go after you. Bank of Baroda was forced to initiate insolvency proceedings against Amrapali Group; the IDBI Bank has to do the same in case of Jaypee.
The right strategy would be to focus on your present. By doing that, you are ensuring yourself a better past and an even better future. Project delay has become the key word that highlights the sector at present. All the efforts must be made by the developer community to give the media something better to talk about, something better to describe them.
Consumer is the king, and would remain at all times
Using this sentence only to look good in the market would be the worst thing a real estate developer can do. For your business to be successful, this has to be your ever-guiding principle, and not only in your marketing brochures. Behind all the doom and gloom in India's real estate sector was an unhappy customer, we know that now. As a result of this, the sector biggies are sitting on huge inventory stock – which would soon be taxed, too – while the fence-sitters refuse to budge from their current station. The motto that the customer is the king often loses its significance when your business is doing great. However, this is the time when you have to live by this motto the most.