Demand in real estate will reach around 1.35 billion sq ft by the end of 2020: Bain Report
Increasing Demand in real estate
According to report of Bain, real estate consulting firm, “The demand in Indian real estate market for organized segment can reach up to 1.35 billion sq ft by 2020, however; currently, it is around 880 million sq ft and out of this 85 percent is for the residential real estate”.
As per report of Bain which was titled with “Residential Real Estate in India: A new paradigm for success” finds that in present the sales of home is slow because of low consumer demand and high price. However; while going to forward, the business of Indian real estate sector will have to things very differently in an order to be successful with positive growth. As per the statement of Parijat Jain, who work for Principal Infrastructure and Real Estate Practice at Bain and Co-author of the report, “The current business model of real estate is changing and it will continue to change more rapidly over the next few years. All the value that was attributable to a real estate firm was in land acquisition, agglomeration and managing approvals”. The more he added that now people are building concrete businesses with sustainable and value addition inputs very good process and very good execution skills to manage real estate market.
In present, the real estate industry is seeing shift because of dynamics and competitive forces, which are giving rise to different business models in the market and regulatory environment are becoming more complex and apart from that the shift in profit is increasing and awareness among consumers are also increasing. However; the inventory level is increasing due to slow growth in real estate market, but still its challenges to sale the older inventory in market. Apart from that the newer projects are doing well in the market. According to Gopal Sarma, the Head Real Estate and Infrastructure at Bain for India Unit and lead Author of the Report, “It is combination where come part of sector are doing very well whereas; other segment is facing rough response from customers”. The more he added that there has never been value attached to discipline in the process to provide quality and best price to customer.
To be successful in the real estate market, real estate builder should keep themselves on three key aspects in mind; first, the real estate builder needs to select the business model with right processes in an order to deliver best service because with well defined processes and valuable chain from the pre-construction through the construction cycle, handover and beyond, can create alignment and increased ROI for companies. Second; real estate builder should decide that in which market they want to play in terms of geography and market segment because real estate is the business of local market, it is not the business of national and regional scale. Third; In most of the real estate market, customers are neither on front nor on centre, which means now onwards builders should think for customers.
