With the entire judicial and regulatory system taking a strong stance in favor of homebuyers waiting for possession of their homes for indefinite periods across India, delivery has become the key to survival for a number of real estate players in the market.

From the Apex courts to the Real Estate Regulatory Act (RERA), the kind of provisions and verdicts the authorities have enforced in the recent past leave no doubt that the real estate developers need to get the rubber hit the road.

Amidst this scenario, there would be two types of real estate companies: those who despite all the intentions to deliver their projects are stuck due to some genuine reasons and the ones who do not want to move ahead at all.

With the entire judicial and regulatory system taking a strong stance in favor of homebuyers waiting for possession of their homes for indefinite periods across India, delivery has become the key to survival for a number of real estate players in the market.

From the Apex courts to the Real Estate Regulatory Act (RERA), the kind of provisions and verdicts the authorities have enforced in the recent past leave no doubt that the real estate developers need to get the rubber hit the road.

Amidst this scenario, there would be two types of real estate companies: those who despite all the intentions to deliver their projects are stuck due to some genuine reasons and the ones who do not want to move ahead at all.Although, this may not happen as smoothly as it appears to be! Until some time back, it was witnessed that despite a persistent slowdown in demand, the sector preferred to hold the horses. Prices did not move an inch, if not up, then not even down, for a long period of time. Nonetheless it changed, but quite slowly.

So maybe this new-year could usher the sector into the path of recovery, the magnitude and speed of change will only be realized in times to come.

With the real estate sector moving towards corporatization, the coming months will also bring about mergers and acquisitions (M&As) in this space. Until now, not much happens on the M&A front as the real estate companies in India generally do not have the level of transparency needed for such transactions. However, there have been a few transactions that indicate towards the emerging scenario. This includes Mumbai-based Sunteck Realty’s Rs.35 crore acquisition of distressed developer Orbit Corp’s Baug-E-Sara project situated in the Malabar Hills. There are several other developers who have expressed willingness to buy distressed asset. Lakshadweep, a JV between Suraksha Asset Reconstruction Company and Mumbai-based Dosti Realty, for instance, was recently in news for their offer to takeover beleaguered real estate giant Jaypee Infratech at Rs.7,350 crore.

The judicial system of the country is also open for promoting ways that lead to delivery of projects to buyers rather than insolvency proceedings. Recently, the Supreme Court allowed three developers viz. Galaxy Group, Kanodia Cement and IIFL-Viridian consortium to complete NCR-based Amrapali Group’s 12 projects stalled at various stages.

However, it is noticed that only the projects that are not entangled into approval or regulatory hurdles and have financial viability are evincing interests from other developers. Companies want to work on projects that have all necessary approvals in place and that are under advanced stages of construction.

From the homebuyers’ perspective, developers forming JVs is a sigh of relief as all they want is delivery of their homes for which they pay huge sums in advance, bearing the double whammy of home loan EMIs and rent on existing home.

The trend will fast cascade down to the core real estate development sector sooner than later, hopefully in 2018 itself.

[“Source-timesofindia”]