Until the beginning of 2014, Dhruv Kumar had a decent real estate brokerage business in Noida, near New Delhi. He had a growing team that earned substantial commission from builders as the housing market boomed. Suddenly, things started to fall apart.
The boom that had pushed up property prices and a slowing economy had started to push down home sales. Prolonged delays in the delivery of apartments didn't help. “Today , bookings in the Noida market are down 70-80% and my business is in tatters,“ he said.
Early in 2015, Kumar decided that enough was enough and he diversified into selling loans and insurance. He also set up a school in Muzaffarpur district of Bihar, where he spends the first 10 days of every month now.
In Bengaluru, Anwar Pasha shut his property brokerage firm and now sells bottled water from the premises of his company, Friends Properties. Some distance away, Mahesh Rajagopal has rented his shop to a food joint and Anand Kumar has turned into an auto consultant.
In Mumbai, many brokers running low on business have rented out their strategically-located small shops to banks for setting up ATMs.
“The days when a builder used to sell 500 or 1,000 apartments in a month are gone,“ said Kumar, who even after diversifying into three different businesses today makes only 50% of what he used to earn selling homes.
The real estate market has slowed in the past few quarters and home sales are still falling. In the June quarter, home sales in the top eight cities of India dropped 4%, while unsold inventory rose 18%, according to data from property research firm Liases Foras. On a year-on-year basis, home sales fell 14% in the National Capital Region.
Home buyers are wary of the market as many projects have been delayed.
“The normal commission rate for brokers has dropped in the past two years, impacting business that has fallen by about 40% for the first time since 2014. The market is very tough and is expected to remain the same until the end of this year,“ said HL Ba gra, president of the National Association of Realtors.
Most of the business that exists in the market these days is cornered by bigger brokers.
“There is no assured earning in real estate anymore.Many other young sales executives still working with brokerage firms are struggling, not knowing whether they will get a salary at the end of the month,“ said Bengaluru-based Rajagopal, recalling how he earlier never had to worry about spending money on luxuries.
Some brokers had anticipated the downturn five years ago. One of them, Jimmit Dalal, entered the garment manufacturing and trading business.
“In 2010 only we realised that the scenario has turned weak and will continue to be like that because of unrealistic property pric es. So we decid ed to enter into a different business of garment manufacturing and trading,“ said Dalal, who is a member of the Estate Agents' Association of India.
“I feel we took the right decision at the right time.There are many of my friends who are considering doing this now,“ he added.Some of his broker friends have started catering services, trading and small manufacturing units and are no longer focusing on real estate brokerage.
Unsold housing in the top eight cities rose to 1,017 million square feet in the June quarter from 942 million sq.ft. in the previous quarter.Unsold inventory in the NCR rose 7% year-on-year to 325.9 million sq. ft. and may take 68 months to be sold.
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