Challenges in Real Estate in India and How to Address Hiccups

Just as every year brings along with it many technological advancements in the real estate industry, there are new challenges as well. We may recall that the real estate sector was one of the areas that was mostly impacted by the Covid-19 pandemic.

However, the market has managed to wriggle out of the pandemic's wrath and is on the growth path. Nevertheless, there are challenges to address. This is what we will discuss here. So, spare a few minutes.

What are the main challenges in real estate in India?

As of now, there are four main areas that we need to address in this market. These include-

1. Insufficient finances

2. Land unavailability

   1. Acquiring land

   2. Population increase

   3. Rising property prices

3. High dependency on the physical workforce

4. Soaring cost of construction material

Let us highlight them one at a time here.

1. Insufficient finances

We know that any construction project is time-consuming. The lifecycle of the project can take several weeks to months and sometimes even years for completion.

The process of availing funds can be difficult since these projects involve high risk. As such, there is uncertainty in cash flow.

The financial institutions that extend funds take time to process the loan proposals. There have been instances when realtors have failed to hand over projects due to lack of funds.

2. Land unavailability

1. Acquiring land

   For instance, you might find it difficult to acquire land if you intend to start a new project in India. Many parts of the land are owned by the government. As such, the unavailability of land is one problem.

2. Increase in population

   Since the population in our country is increasing, it might pose to be difficult to get land. This is because the majority of the population live in Tier 1 and Tier 2 cities. More cities would be needed to accommodate people. And it might not be easy to get land easily.

3. Documentation becomes streamlined

   The real estate market, regardless of whether it is commercial or residential involves a lot of paperwork. Documentation is related to transactions, sale or buying deeds, contract analysis, agreements, and compliance, and involves a lot of fine print. This is better managed with the help of artificial intelligence-powered tools.

4. High property costs

   We know the price of property is escalating. If a realtor is a small investor, he may not be able to afford the price. If the government gives some relief in terms of pooling policies and land readjustments, it could help small-scale realtors.

3. High dependency on the physical workforce

Higher dependency on the physical workforce is one of the biggest challenges in real estate in India. Due to COVID-19, many projects came to a halt due to a lack of labor.

The engineering, manufacturing, and construction sectors were adversely impacted. As per a study, the shortage is between 15% and 25% and continues. It will take some time to recover from the shortage fully.

4. Soaring cost of construction material

The entire world is reeling under economic meltdown. Every government is fighting inflation, hiking taxes, and realigning its financial policies so that it can survive and thrive.

Construction materials play a crucial role in real estate. Construction materials like cement and steel have experienced a price hike.

One of the main reasons for the price increase is a shortage of raw materials coupled with a surge in fuel charges.

This has compelled developers to work at limited margins after the pandemic. This is also the same reason for the hike in rental properties as well. This trend is expected to carry on for some time.

How will you address the challenges?

Just as there are challenges, there are ways out as well. These are-

• It makes sense to use an automation tool to maintain the database. It facilitates communication between past and present clients. It saves time, energy, and effort.

• Explore budget-friendly alternatives. Use technology that can help you to streamline various processes associated with the real estate sector.

• Ramp up customer service and post-sale support for customers.

• Try to grow organic traffic. It helps in gaining visibility.

Aside from the above, there are many other measures that you can implement based on the requirements of the client and your business model.

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