More Cautious 2010 by Realty

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Indian developers are looking forward to more feasible studies of any project before actually launching them so that they can avoid the excesses that resulted in the real estate downturn in 2009.

They are sending out a message that antagonism in the market will not be accepted any more and gigantic projects will be replaced by developments that buyers want rather than speculators.

Some fairly new measures will be taken in such a sector dominated by family-run businesses. According to property consultants they are entering into strategic affiliation
for labour and raw material, appointing project management consultants, and outsourcing construction work for quicker delivery.

Aditi Vijaykar, executive director (residential) at Cushman and Wakefield India said,‘Builders are back with a bang but not an aggressive one. They want to try out new locations for projects and are trying to test a product before launching it’.

India’s largest developer by market value, DLF, will not buy land in current year and the next neither it will launch any new projects until and unless it has regulatory approvals. Presently the working capital model of DLF will depend on cash flow from pre-sales, customer advances and bank debt. Though it is not that easy to stop abstract buying, but a system like one home per family is required.

The realty sector is now conducting feasibility studies on the sizes and pricing of homes to ensure the right profile for its projects which was rarely done in previous years. Developers are also looking at special purpose vehicles or joint ventures instead of purchasing land outright. The real estate firms are also raising money though initial public offerings are aiming to use the funds for ongoing and proposed projects or to retire debt.this is extremely different from what it was done in 2006 and 2007 when everybody was interested in making money.

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