However, the road to recovery has been painful. After the collapse of Lehman Brothers on September 15, 2008, the noose tightened around developers’ neck with sales down to a trickle as prospective home buyers looked to save jobs and cut expenditure. High interest rates made matters worse.
Come March 2009, developers realised that there is no other way to make sales happen but to bow down to the needs of customers. Developers started resizing projects keeping the buyers requirements in mind — 1BHK (bed room, hall, kitchen) and 2BHK flats with sizes admeasuring 400-650 square feet (sft) started coming back in vogue. Projects were launched by slashing rates by 30-35% from the market price.
The buzz word in realty became “affordable housing” and every developer added a new profile — Unitech gave way to Uninor, DLF will launch “value housing” and Lodha’s with their “Casa” branding.
Even banks cut interest rates as they sought more business. State Bank of India introduced the fixed-floating interest rate (where the interest rate is fixed for the initial years and then floats for the rest of the tenure). Things started looking up on the economy front as well. The job uncertainty was reduced and fears of a prolonged recession were no longer there.
Buyers started thronging to the real estate market. Developers saw booking sales of 50-70% in their projects in a fortnight’s time.
However, the mid-income segment wasn’t the place for them to raise funds to repay the debt that lied in their books.
The government stepped in, requesting banks to restructure the humongous debts on the books of developers and bringing in new norms for raising money through FCCBS for township projects.
Thus Unitech launched its qualified institutional placement (QIP), setting off a trend of QIPs that changed the realty game completely. Indian realtors cumulatively raised Rs 8,380 crore in the year.
However, realty prices have surged 30-32% in the second half of 2009, driving buyers away and the pent up demand, which gobbled all properties in display, is satiating, fast. Housing registration data shows a fall in sales across India after the Diwali Dhamaka season and thus begins the new struggle for developer of attracting buyers to the foyer.
May be realtors have not yet learnt heir lesson.
Real estate prices have come a full circle - Pooja Sarkar - dnaindia.com
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