Challenges & Opportunities ahead for Real-estate
As a young entrepreneur, M R Jaishankar, Chairman & Managing Director, Brigade Group established the company in 1986. He briefs on the current real-estate scenario and company’s growth plans.
Brigade Group based in Bangalore has projects across South India in Bangalore, Mysore, Mangalore, Hyderabad, Chennai and Kochi and now GIFT City, Ahmedabad. However, we would continue to focus on cities in South India. We plan to develop 30 million square feet across all our domains in the next five years in the markets we operate. The current real-estate portfolio of Brigade Group comprises 70% Residential, 20%Commercial-20% and 10% of Hospitality projects.
Investments, associations and JVs of the Company
Brigade works with reputed international master planners like HOK, New York, NBBJ Seattle in the residential space and has strategic tie ups with international hospitality groups like Starwood Group now Marriot, IHG and Accor that manage our Sheraton Grand, Holiday Inn and Grand Mercure hotels. Many of the Fortune 500 companies like Amazon, Siemens, ABB and more are the customers in the office space business apart from knowledge leaders like Mckinsey, Ernst & Young, PwC and KPMG. The retail business enjoys a strong association with important international and national retailers like Zara, Debenhams, Mango, McDonalds and we are poised for healthy expansion in this space.
The impact of current changes on Indian real-estate buyer
Much has happened in the macro environment - successful demonetisation; introduction of GST proceeding in the right direction; commencement of RERA (Real Estate Regulatory Act ); a booming stock market; et al.
With the announcement of tax rates, the suspense surrounding the much anticipated GST (Goods& Services Tax) is over. Now it is a question of ensuring it is implemented both in the letter & spirit. The exemptions given and rates announced by the committee of finance ministers seem to be very fair.
By & large, GST should help business & industry in overall reduction in costs which is expected to be passed on to the ultimate customer / consumer. But, there would be a settling down period and confusions / misinterpretation galore during 2017-18 at the least.
RERA is a welcome legislation and will have long term positive effects on the sector but is also bound to add cost due to compliance and other issues like delay in obtaining additional approvals from RERA authority before a project is launched. The real estate sector already suffers from the problem of dealing with too many civic authorities, who have been conveniently let off by the government from the regulations of RERA.
Affordable Housing will soon become the flavour of the season for developers and consumers alike. Rightly so, what with more than 20 million homes to be built in the next 5 years to meet PM Modi's target of 'Housing for All' by 2022, to coincide with the 75th anniversary of Indian independence. For the mission to succeed, the state government and civic authorities should give incentives ( if not subsidy ) by way of allotment of government / slum redevelopment land, reduction in stamp duty, reduced approval fees for building plans, water, sanitary & electrical utility connections for affordable housing projects.
The benefits of industry status to affordable housing
The year gone by saw the government rekindling interest in the decade old buzzword – “Affordable Housing.” It saw some concrete interventions by the government throughout 2016 to propel the critical, but a largely neglected segment. Numerous measures to promote private sector participation have been taken in the year - such as awarding infrastructure status to affordable housing, 100% deduction on profits for affordable housing projects, increasing the liveable area of the units and relaxed completion timelines, amongst others.
Demand side measures such as interest subventions (announced in December 2016) and budget announcement of The National Housing Bank (NHB) refinancing individual housing loans of about INR 20,000 Crores are measures that are likely to boost demand for home loans.
However, despite these measures there are still some final pushes that the segment needs in order to be completely viable for private participation. Availability of land, relaxation in development norms, faster approvals for affordable housing projects, better alignment between central and state policies are some of the factors that need to be addressed to allow the segment to achieve its full potential.
Projects
Tags : Developers Speak