The word 'China' has an indisputable influence on the world, perhaps more than the 'US'. Such has been the dominance of China on the world that every country is unwittingly forced to devise strategies- politics & economics alike- keeping China in mind. Boom or bust, China directly contributes to the world.
One of the biggest stories in the Chinese economy is the development of Real Estate at supersonic speed. The haunting stories of 'ghost cities' will always have a special mention in the world economy and history.
The story is growing scarier by the day. The dragon size debts of some of the largest construction companies can send shivers down the spine of some of the most resilient economies of the world. The violent mortgage protests by the general public are spreading like wild fire across the country. The news of leading banks, imposing restrictions on withdrawals, is giving sleepless nights not only to citizens but also to the world.
Why should the Indian Real Estate market bother about all this?
Post liberalisation, Indian economy has been directly or indirectly linked to the world economy through various economic descisions taken by the government from time to time. Just like the collapse of Lehman Brothers impacted the whole world in 2008, an economic upheaval in China can impact the whole world. Should the Real Estate bubble burst in China, the intertwined relations of various branches of economics with China's Real Estate market, will certainly cause tremors across the globe.
With a huge trade deficit with China, India has reason to worry about the precarious situation of the Chinese Real Estate industry. Besides the sentimental effect on Indian Real Estate industry, the financial implications of Chinese developers going bust can make many foreign investors nervous about investing in Indian Real Estate companies. Further, there are Chinese Real Estate investment companies who have already made investment commitments in Indian Real Estate market. Even if a single Real Estate company goes bust in China, it will set cat among the pigeons. On a lighter note, it will be as disastrous and infectious as Covid-19, which too originated from China.
For the last couple of years, Indian Real Estate industry is saddled with over supply especially in NCR region. There have been many instances of builders getting stuck with incomplete projects across the country. The heterogeneous and tentativeness of demand pattern has left the builders with huge unsold inventory - ready as well as under construction. The spiralling cost of production has dealt a deathblow to the bottom line leaving the builder with no room to maneuver.
Time is running out. It's time to press the accelerator to offload the unsold inventory by giving up the conservative marketing approach, before the 'Chinese Billi' runs riot among the pigeons.
The Chinese Billi was made popular by the Bollywood potboiler 'Golmaal'.
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