The real estate industry in India is facing an uphill challenge. Last 5-6 years have seen an unprecedented rise in rates of real estate all across India. The rise is really phenomenal as it is beyond any logic that market experts could attribute it to.
But, now it seems the rally has stopped. The rise has stalled for the time being. But, the recent hike in the sale prices in real estate has resulted into a corresponding rise in the input and interest costs. So, even though the prices are unaffordable, they are not coming down. The developers of the real estate industry can’t sell at lower rates and can’t bear the burden of the unsold inventory also.
So what is the solution?
In marketing terms,there is a NEED for the accommodation, for the real estate. But this need is not resulting into sales, because the price is not affordable to the customer. How to bridge this gap?
1) If we observe recent trends, there is a lot of mobility in people’s careers. More people are shifting bases rapidly, jumping from one job to another, from one city to another. The demand-supply equation of the job market is prompting people to stay at a city for few years and then move to another city. A large number of these people are youngsters, who are not yet married and are open to change cities for few years. But, each time they shift to a new city, they have to pass through a lot of hassles of finding and settling into a new house.
2) There is a huge movement of marketing/sales/support people across the country for shorter periods at various cities and towns. They face difficulty in finding decent accommodation, because hotels are prohibitively expensive and the low-end options are unacceptably lower in quality. Admin departments of companies are always hard pressed to find good temporary staying solutions for their touring staff members.
Such types of movements of people from one place to another can be supported and exploited commercially by real estate developers.
For that, they need to look at little ahead in their value chain. They need to develop real estate management organization and provide managed, furnished, shared or independent decent and affordable paying guest type of accommodations to individuals, families or companies for various types of time periods.
In short, there is a huge demand for managed, rental accommodations which do not have troubles associated with Leasing or renting Leave & License accommodations and are affordable below the hotels. Also, if such housing options are available across major cities, companies will be interested in booking accommodations for their touring manpower. They will get same standardized quality across various cities.
In today’s changing India, temporary ownership is becoming popular. Customers are not averse to paying for using something of good quality. This way, even if they can’t buy it, they can avail of good quality product or service. And the real estate developers can get better returns on their investment, while still holding the ownership of the property and earning its appreciation.
Just like radio cabs pooled together many assorted transporting vehicles, it will be pertinent if real estate developers and investors look into similar options for accommodation.