What cannot be learned in the class room or the board room, is better learned by market dynamics, that too, against the odds. The Indian real estate sector, in search of better finance and clear policies, seems to have learned it on the job and hence, there seems to be a strategic shift in its operating methodology. This indicates that the market is on its way to maturity in 2014. Realtors have, of late, learned to innovate. Different business models are now being used. One of the most popular models is that of setting up joint ventures with land owners, since developers have learned the hard way that buying too much land, can hurt.
Even the most seasoned developers in the country have sold some of their land bank on which it did not have plans to construct soon. Others, while venturing into new markets, preferred to look for a local developer or landowner, so that it only had to invest in the building of the project. There are companies, even newer ones, who have been operating successfully without any land assets.
“This model allows the realtor more flexibility as the developer is not paying interest on loans taken to buy the land,” explains Pranay Vakil, chairman, Praron Consultancy. “He can go about a project by building and selling one completely, before starting on the next. It also gives him more holding power in a bad economy.” At least half the projects under construction now, follow this model.
Read more: The Times of India