There have been times when business has been slow in other industries but not in real estate. However, as has been evident during the last two years, prices in real estate have been falling for various reasons. One fallout of this is that the speculators who were holding on to large blocks of real estate to be sold later were left holding the baby.
Now, no easy and impressionable middle class couples are buying for love or money as the raging fever and the mistaken belief that real estate prices will keep going up, up and up -- no longer remains.
What is going to happen once these speculators who had parked nearly Rs 5,000 crore each and had been holding on to prime and not so prime real estate start understanding that the age of pulling the wool over the customers' eyes are over and the real estate industry will function like any other industry where the margins are thin and competition is thick.
Nowadays the factors which will decide, which real estate projects make money or even break even are the efficiency with which raw material is being bought, logistics is maintained to cut costs, just in time principles are being followed and human resources are being deployed in correct positions which take care of the needs of the projects and also the specific skills of the resources deployed.
Private equity is one way out of this mess as it does not entail listing the company , which is possible only after a few years of operations . Real Estate companies are mostly three to six months affairs barring a few usually run by an entrepreneur and his joint family . Owing to the boom, they operated out of large buildings and swanky offices with electronic locks to the chairman's office.
Now real estate barons are either coming to terms with the fact they will have to move to another business where they can ride another easy wave or tighten their operations and bring their ship to order.
Monitoring the inputs from private equity firms and accountability for every rupee that goes into the project and that comes out as added value, would be a good way to begin.
Real estate never had it so good. The government is mulling over how to solve the housing problem, so good players with prudence are sure to get orders. The ones which will fall by the wayside and not survive are the ones whimpering .