Table Of Contents
- Challenges In Real Estate Industry #1: Real Estate Challenges 2023
- Challenges In Real Estate Industry #2: High Dependency on Physical Workforce
- Challenges In Real Estate Industry #3: Surge in Cost of Construction Materials
- Challenges In Real Estate Industry #4: Unavailability of Land
- Challenges In Real Estate Industry #5: Insufficiency of Funds
- Challenges In Real Estate Industry #6: Challenges For Real Estate Agents In 2023
- Challenges In Real Estate Industry #7: Building A Database
- Challenges In Real Estate Industry #8: Keeping Up With Technology
- Challenges In Real Estate Industry #9: Increasing Competition
- Challenges In Real Estate Industry #10: Finding Listings In The Market
- Challenges In Real Estate Industry #11: Nurturing Leads Like A Pro
- Challenges In Real Estate Industry #12: How Real Estate Companies Can Overcome Challenges In Real Estate Industry?
As 2022 has wrapped up, it is time to prepare for what lies ahead for the real estate industry in 2023. Every year brings new technological advancements but also its own sets of challenges. The real estate industry was one of the most affected industries during covid and as it is pacing up, there is a lot of growth in store for it but a few challenges as well. If you are from the real estate industry, this blog will give you a sneak peek into the challenges in the real estate industry for 2023 and a possible look out for the solutions.
Real Estate Challenges 2023
There are four main challenges in real estate industry post the recent slowdown from the pandemic :
- High dependency on the physical workforce
- The surge in the cost of construction materials
- Unavailability of land
- Insufficiency of funds
1. High Dependency on Physical Workforce
One of the main 2023 challenges in the real estate industry could be its high dependency on the workforce. The pandemic led to a halt in the construction of several ongoing projects due to a high dependency on labour. The acute shortage of workforce during the pandemic led to delays in a ton of projects.
As per an article by Fortune India, India faced a shortage of workers across industries like engineering, construction, and manufacturing in 20233. This shortage is approximately between 15-25%, and it will remain a threat to the real estate industry irrespective of the pandemic.
2. Surge in Cost of Construction Materials
Inflation is a major problem that is becoming a big challenge for all industries. As per an article published in November 2022, this inflationary pressure is likely to intensify further in 2023 and is one of the real estate problems of 2023 that the industry will face.
Construction materials are a major constituent in the work done by real estate developers. Key materials like cement and steel have seen a cost hike in the recent past. The main reason behind this cost hike is a shortage of raw materials and a surge in fuel charges. In order to sustain this situation, the realtors are working with a lesser margin post-pandemic. There is a possibility that this increase in the cost of raw materials will lead to a surge in rental prices, which might make property purchases less affordable altogether.
3. Unavailability of Land
There are three challenges in the real estate industry that might be caused due to the unavailability of land. They are:
- Difficult process of land acquisition
- High property prices
- Increase in population
Difficult Process of Land Acquisition
The process to acquire land for a new project in India is cumbersome. Also, even if the process is stringent, there is a substantial part of the land that’s occupied by the Government. Hence, the land is just not easily accessible or available.
High Property Prices
The property prices are pretty high. A small developer cannot invest in land due to land. If the Government spares shares of underutilised land by using land readjustment and land pooling policies, it could come as a relief to developers.
Increase in Population
India’s increase in population can also pose a threat to the availability of land. Most people in India reside in Tier I and Tier II cities. India would need more such cities to accommodate India’s growing population. It could lead to the unavailability of land easily.
Insufficiency of Funds
The process of construction is lengthy, and any new small-scale developer needs funding. It can become an issue in availing funds from financial institutions, and such projects usually involve higher risk. The decisions in this case are purely made on uncertain cash flow. Thus, even financial institutions take time to scrutinise loan proposals. Many realtors fail to deliver their projects on time due to this funding insufficiency as well. It is one of the challenges in the real estate industry that can affect the real estate industry quite a lot.
Challenges For Real Estate Agents In 2023
If you are a real estate agent, here are a few challenges that can get in your way in 2023:
- Building a database
- Keeping up with technology
- Increasing competition
- Finding listings in the market
- Nurturing leads like a pro
1. Building A Database
It is one of the problems real estate agents are facing quite a lot these days. It holds back the success of a lot of agents. You should stay in touch with your clients even after a deal is closed. The focus should not be only on immediate sales. You should also follow up on the payments and sadly very few agents can keep up with it.
2. Keeping Up With Technology
Keeping up with the technology is definitely one of the major problems real estate agents are facing. If this happens to you, the competition in the real estate industry can become a problem for you. Customers expect exceptional experience, and if you are not up to date with technology, it can lead to failure.
3. Increasing Competition
There is a growing list of portals and home-buying apps which need less to no agents. It is one of the most common problems real estate agents face. Presently the role of a real estate agent comes into the picture only during the buying cycle. It can become really hard to find referrals on social networks, and digital marketing becomes less effective too.
4. Finding Listings In The Market
It is one of the problems real estate agents face too. It is difficult for real estate agents to find listings in a low-inventory market. As an agent, your lack of experience can make it hard for homeowners to trust you. This lack of experience can never be fulfilled unless you find a homeowner who wants to list with you.
5. Nurturing Leads Like A Pro
It is one of the problems real estate agents face that leads to a high lead cost. If you are a real estate agent who focuses on capturing new leads, you need to know how to nurture them too. Just capturing leads will lead to a low conversion rate. If you plan or buy leads using platforms like Google Ads, the cost will increase.
How Real Estate Companies Can Overcome Challenges In Real Estate Industry?
The recurring challenges in real estate industry can be minimised using the following ways.
1. Building a database becomes easier when you use a marketing automation tool. It can be difficult to stay in touch with all your past clients, and automating emails or messages saves a lot of time. It reduces the effort needed to talk to each client and ensures you send the right message to your target audience effectively.
2. Keeping up with the technology can be difficult, but it is the need of the hour. Technology can help you make smart decisions and provide you with budget-friendly alternatives. You can try adding live customer support if you built a website in this process.
For example, Clicbrics, one of the online real estate platforms in India combine real estate and technology expertise to pioneer a new paradigm for India's online real estate marketplace. They are offering buyers with the transparency they require to make an informed investment and sellers with the liquidity they need to complete developments on time.They are using the proprietary data to offer the estimated market value of the home to the buyers and craft impactful transformations through data intelligence.
3. If you are new in the market, try listing local businesses, local news, or events nearby. It will help you gain the trust of search engines, and you will start getting established as a trustworthy source. Eventually, as your database will grow, you can cultivate relationships.
4. Referrals are one of the best ways to overcome the challenge of finding listings in the market. Sellers are more likely to trust their referrals rather than a stranger. You can also interview local businesses to increase your area of influence or do live events on social media. Business owners can promote your service with word of mouth.
5. Getting new leads is both expensive and time-consuming. Hence, keep your focus on growing organic traffic. It will help your brand get visibility using the right keywords and improve the appeal of your website too. On-page SEO and backlinking work well in this case.
There can be a lot of other real estate challenges in 2023, but knowing how to overcome them can go a long way. We hope this blog helped you understand the nitty-gritty of challenges facing the real estate industry in 2023 in detail.