Key impact areas for the future of property development in India
The Covid epidemic has been difficult for the majority of real estate enterprises. Property developers have seen an extremely difficult and uncertain time, and the real-world effects on the big players and the minor ones in this industry have vastly differed.
Unless you have access to inexpensive financing, the margins in real estate development are relatively small. The margins aren’t always excellent with the major players, but the sales volume is there, and huge developers can get finance relatively simply. This enables you to generate a profit while maintaining some degree of stability during a trying time.
1) Importance of investing in sustainable & green projects
There is a green angle that is becoming more prevalent in developments, so you must take that into account while planning a project.
People are now considering homes that are more environmentally conscious and sustainable as a result of changing consumer expectations. You can increase your margins if you choose the eco-home option and attract the appropriate consumer base. But doing so carries some danger. If you can’t sell the homes, you likely spent more money on each home’s construction and fit-out, which will result in bigger losses. Solar panels, electric car charging stations, and other upgrades are pricey and add to the build time.
2) Technology infusion into real estate projects
The real estate industry is undergoing substantial transformation as a result of new technology and an increase in finance. This increase in capital should be interpreted as a sign that the real estate industry is preparing for a rapid transition as a result of the advent of new digital resources. Most importantly, investors need to be ready for the influence that smartphone apps, smart digitized amenities, blockchain technology, virtual reality and online property listing platforms will have on all facets of real estate transactions.
Investors will soon notice an increase in competition among websites that advertise properties, many of which are designed to make it easier for prospective or current property owners to acquire and sell – on the theme of smartification/digitization of the housing project.
3) The impact of supply chain & labour issues on real estate investment decisions
Budgets and returns on investment have been significantly impacted by the sharp increase in labour and material expenses over the past year (ROI). A tiny developer must be:
• More awareness of market and building industry problems.
• More concerned with costs and how they might change over the project.
• More deeply immersed in the project’s intricacies so that you are on top of every detail.
• More conscious of the necessity for sensitivity analysis regarding labour and material costs.
• More aware of the possibility that, as construction progresses, the value of your property can decrease rather than increase.
Planning ahead for property development decisions
It’s critical to consider both the best and worst case possibilities while making plans. Sometimes, housing values don’t respond as you anticipate. In your model, you wouldn’t want to rely on a certain price increase. It is best to anticipate the worst-case situation and make plans for it so that you are ready if that is how the cookie ultimately breaks.
You must be more cautious and sensitive to risk as developers. If you prepare for all potential outcomes, you’ll be more likely to survive the market’s ups and downs. Planning for many scenarios enables you to adapt to and manage whatever the future brings.
The mindset of a developer must adapt to the new reality because the world has changed. At first, everything was selling, there were profits, and everyone was getting wonderful returns. However, things have changed recently, and we now see a completely different future for real estate development, at least in the near future and through 2022.
