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The slowdown in the real estate sector with rising interest rates, rising inventory levels, and tightening liquidity have hit capital availability for developers, and this is causing delay in the construction of residential projects across segments.
There is also an escalation in land costs, liaison costs, construction costs, and marketing costs. Finances have been stalled by the RBI, and the interest rates on home loans for buyers have also increased. A series of tedious processes for approvals on the building plan, layouts, the basic amenities and NOC's from the pollution board, lift authorities, sewage and water supply utilities, neighbouring societies, from the local governing authority, followed by the state and central governments, if required, add to the delay. Once the construction work starts, the non-availability of manpower and inadequate supply of raw materials due to change in Government regulations can also lead to the delay of the project, and with the delay comes the burden of additional overhead cost that affects the credibility of a developer.
PROJECT DELIVERY
So the question remains: Can one deliver a project on time? The answer is yes, from personal experience of the Neev Group. From the consumer's point of view, timely delivery has good implications for the end-user, both financially and psychologically:
With the timely delivery of property, the security deposit and the rental amount saved can be used in paying the EMI; a family staying in a rented house can make long-term plans. If the investment is for a second home, then it has dual benefits — tax benefits can be availed, and it is a secondary source of income if the property is rented out. The rental income can be used to pay off the loan EMI, and once repaid, the rent amount turns out to be a fixed source of income, appreciating every 11 months.
CONSTRUCTION
Timely construction can prove beneficial, not just only for buyers but for the developers as well. There are certain guidelines to achieve timely delivery.
Time is money: The faster a redevelopment project is completed, the rent and overhead costs are minimised, providing more cost optimisation for the builders.
Consistent plan of action: Developers should have a consistent plan of action in place before commencement of projects, which is of immense importance.
Permissions: All the permissions from legal bodies, approvals from the government, and regulatory bodies should be received beforehand to avoid hindrances and delays in the project. All departments, right from the engineering team, purchase, and sales, should collaborate and familiarise themselves with the project plan and structure.
Raw materials: Being self-sufficient with one's own raw material production plants helps developers deliver on time, by providing continuous flow of raw materials required for the project.
Experience: Expertise and technical knowledge of employees working in the industry for a long time can contribute in a large way to guaranteeing the success of a project. Developers should focus on recruiting and engaging best-in-class talent and a dedicated workforce
