What are the Top 7 challenges faced by Builders in Pune?
The real estate dynamics in Pune has been the witness to significant changes in past two years. Builders too have felt the brunt of these. Best builders in Pune have been able to digest the changes without allowing their service efficiencies to suffer.
Customers’ response to real estate has been lukewarm since demonetization primarily due to the uncertainties that have clouded their intellect. It had its repercussions on the market although top builders in Pune have been resilient enough to recover fast due to their resourcefulness and foresight.
Builders and developers in Pune have come across many challenges in the bygone year. However, the top 7 challenges that have confronted them are being summarized below.
1) Heightened Future Expectations of Buyers
Pune sits in the list of 98 cities to be developed as ‘Smart City’. Pune Smart City Development Corporation Limited has also been constituted to execute earmarked projects. Concurrently, the incumbent government has rolled out its ‘Housing for All’ plan to be completed by 2022. This has resulted in prospective buyers deferring their home purchase plans for the time being in the expectation of better deals in future. Inventories have remained unsold and arranging liquid cash has become a challenge.
2) Fund Mobilization Issues
Builders in Pune are also suffering from the apathy of banks and financial houses. Inventory build-up has resulted in lower sales and as such loan repayment process has been slowed down. Defaulters like Vijay Mallya and Nirav Modi have caused banks to be over cautious. As such, credential and loan repayment capability verification has been taking inordinate time. Mobilizing funds have become tougher.
3) No Revision in Lending Rates
Reserve Bank of India has not revised its repo rate of late. Home loan interests have not gone further down. Market sentiments too have not received any facelift. Banks have been reconsidering their strategies for lending home loan. Cost of living has gone up in Pune, and with no hope of home loan interests going further down in recent future, many potential home buyers have been shelving their plans. Consequently, revenue related projections of builders in Pune have been disarrayed.
4) Projects on the Verge of Completion Suffering from RERA’s Introduction
The entire list of builders in Pune has been brought under the ambit of Real Estate Regulation Act (RERA) by Municipal Corporation. One of the provisions of RERA is iron clad warranty against any structural defect or shoddy workmanship for a period of five years after delivery. This mandates securing comprehensive warranties from suppliers to indemnify buyers against any contingency. Documentation has to be rigorously prepared. However, suppliers are unwilling to be a part of liability indemnification pact for projects on the verge of completion. This has put builders under tremendous strain.
5) Exorbitant Escalation in Land Rates
As more and more land within Pune municipal area is becoming available for a premium, the costs of projects in prime locations are experiencing steep price rise. Buyers are increasingly opting for rentals rather than go for fresh purchases. This is causing inventory levels to go up.
6) Slackened Pace of Approval for New Projects
Builders are also grappling with the challenge of non-streamlined clearances from civic authorities in Pune. Corresponding delays are taking their toll on the price of the projects. This is because the committed/ advertised prices of apartments are not remaining feasible after factoring in the increase in raw material and other infrastructural expenses during the delayed period.
7) Increase in Cost of Raw Materials
Prices of cement, steel rods for trusses, and other raw materials have gone up significantly in recent times. Further, minimum wages of workers have been significantly revised after the adoption of the recommendations of 7TH Pay Commission. This has caused even reputed builders in Pune to reel under the pressure of allocated budgets going haywire.
Sancheti Builders, one of the best builders in Pune, has remained immune to these changes primarily because of the robustness of their strategic road-map. You can always trust on the quality of construction and rest assured that you would never be overcharged.