The economic climate, not monsoon, is what determines the fortunes of players in the real estate sector. For instance, in 2009-10 — the most recent low rainfall year — Mahindra Lifespace Developers saw its revenue nearly double and profit jump over 70 per cent year-over-year. Likewise Prestige Estate Projects’ profits increased 86 per cent in that period. The good performance by most developers was in contrast to the non-drought year of 2008-09, when revenues and profits dropped substantially due to the global economic crisis.

In fact, lack of rains can be beneficial for the sector. For one, lack of agricultural work may increase labour availability. This along with construction continuing during the season improves revenue recognition and cash collection from the customers, as these are based on percentage of completion. Also, apartment booking by buyers, especially in Mumbai, slows down when there are heavy rains and delays in onset of rain can enhance buyer interest.

The realty sector had a difficult year in 2013-14 due to weak demand caused by a sluggish economy and high interest rates. Developers also went slow on new launches since they had a large inventory of unsold homes. However, sentiments are improving and many developers such as Oberoi Realty and Prestige Estates have purchased land for new developments. The recent Budget has also been positive for the sector. So, notwithstanding the lack of rain, the prospects for the real estate sector are likely to improve in 2014-15.

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