My real estate journey started in 1993 by virtue of running a business where raw material was clay (Brick Business) , however the real estate which the common man understands Makaan , Dukaan , Daftar started in 2003 in metro city of NOIDA
Real Estate was a fantasy world with happiness all around . You only needed a small portion of money to buy your dream home or office or retail space – thanks to bank leveraging remaining was funded and the interest that you paid on the loan also found some waiver from your income tax
The home buyer was super happy because he could afford to buy his dream home and avail tax benefits . The Real Estate Developer saw this as a financial opportunity as he could raise money from financial institutions – private investors and the bigger money from the customer who in turn leveraged his CTC to raise a loan and pay full payment of his purchase on DAY 1 .
With demand exceeding supply and number of projects being in limited number inflation drove all crazy The Customer as he saw prices of the property going up by the passing day , The Developer as he was able to raise large amounts even before starting and also extremely good margins , the financial institutions because they were able to lend to retail customers for home purchase (which is considered safer than lending to other businesses) and make money on the interest earned , investor made a killing by lending to the developer at high interest rate and also buying property at a discounted rate and finally the govt which claimed to have made policy to support housing for all
There was happiness all around until the Sub Prime crisis of 2008 which hit one of the biggest financial institution of the world 'Lehman Brothers" .
With this started the stress in real estate industry . The policy makers woke up and randomly started changing the lending norms to the industry . In a short time, there was a liquidity crisis in the industry and you could see happiness wading of . The developer did not know which door to knock and the customer started staring into default in delivery
The RBI did give some relief by virtue of introducing Subvention payment plan so as to ease the liquidity in the industry . The wheel started turning again and you could see cranes moving at construction sites and customers cueing up outside developer's office .
And then came the demonetization in 2016 . The agenda of the govt was to bring all unaccounted monies into accounting system which would kill inflation and the heated real estate market could cool a little bit so that a common man could afford buying his home . Further govt set in a compliance structure to regulate real estate . RERA , GST , NCLT and IBC were introduced so that people could have a recourse to their problems
This hit the unstructured industry hard and there was a complete blood bath .
We have seen major delivery defaults and also financial defaults which have paralyzed the industry . There is pain all around – customer , vendor , financial institution , employee all are in terrible state . We are all trying to find answers but little do people realize that the answer can be found only if the root cause of problem is known
This book is to explain and illustrate the root cause of the real estate crisis which we are facing today and it also puts forth suggestions which can bail all of us out
An Honest Attempt …
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