The slow recovery of the economy is the right time for the realtors to change the business model and bring discipline in planning, execution and pricing of the project, financiers and experts from the sector said.
In a panel discussion on ‘Future of real estate investment climate in Karnataka’ organised by Credai, moderator and former chairman of the association J C Sharma said the real estate sector was facing headwinds not only due to the series of reforms by the BJP government since 2014 but also because of several internal factors.
“The situation of the sector in Bengaluru is much better when compared with the national capital region or Mumbai. However, this engine of growth needs to fix the problems within to get further support from the government and financial institutions,” he said.
The internal factors, K P Agarwal of HDFC Finance explained, were as strong as the external factors like the policy decisions of the government.
“It is true that issues like strict directions by the National Green Tribunal and pending TDRs have had a bearing on the sector. But the indiscipline among the companies, like the closure of account with unsold inventory, taking up projects beyond their capacity, are immediate factors that need to be addressed,” he said.
State Bank of India Chief General Manager Abhijit Majumdar pointed out that Karnataka was one of the few states with transparency in transactions.
“Realtors should deliver quality work meeting the deadline commitments. This helps financial institutions in easing the lending process,” he said.
Mayank Saksena, another panellist, said 80% of the real estate products in the market do not fit the needs of the customers.
“Companies do not conduct any research on the needs and bring to market products that are not realistically priced. Products are designed as per their whims by over-optimistic companies which end up suffering,” he said.
Majumdar pointed out that GST, demonetisation and affordable housing are some of the steps which have forced the realty sector to transform itself.
“This is the time to change the way one approaches the business and bring in more transparency,” he added.
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