‘Location, location and location’ has been the tried-and-tested format of success in Indian real estate, so far. It has been the best calling card for all developers. Many even assumed that if a developer has land in a highly desirable location, then that in itself is enough to sell the project. However, the current slowdown in the real estate industry, has just forced them to wonder why another developer in the same market is successfully selling at a higher price point while their own project is heading nowhere.
The answer lies in a single word – research, or the lack of it. Take the case of a builder who has abandoned his housing project in one of the most desirable locations of south Delhi. The said developer borrowed heavily to buy an 800-sq yard park-facing corner plot in West End for Rs 90 crores three years back. He was forced to abandon the apartment project and put the plot on the block after failing to find takers. Analysts point out that the same builder would have sold the apartments even at the drawing board stage, had he read the pulse of the market right.
Anish Shah, director, Amal Realtors, however, believes that in certain locations, it is true that land competence itself is enough to sell. He cites the example of Mumbai where the biggest difficulty is the procurement of land. In Mumbai, land is enough to sell your project. “In Mumbai any developer is ready to pick up any land. The project is planned keeping in mind the kind of demand that particular land will induce,” points out Shah. “Accordingly, it’s decided whether it should be a residential or commercial or IT project. However, when it comes to the outskirt areas – the MMR region, Thane or western suburbs beyond Virar, the demand is uncertain,” says Shah.
Sandeep Ahuja, CEO, Richa Realty, candidly admits that the developers have been carried away by land competence for the past several decades. The have neglected research about demand. “In the same Mumbai micro-market, one developer with a better product is able to sell more and reach more people, than a developer who has not focused on the research. The developers have been ignoring it but I think now, they won’t be able to do so anymore,” explains Ahuja.
Another instance is Noida, where analysts point out that the current demand and supply mismatch is largely due to the overwhelming desire to make the best of location advantage. Noida’s units are very large in size and the buyer cannot afford another location, such as Gurgaon or Delhi. Had the developers in Noida sized their units correctly, based on researching the buyers’ needs, they would have been able to sell more.
(The writer is CEO, Track2Realty)