IMPACT OF GLOBAL PROPERTY MARKET TRENDS ON INDIAN REALTY
Santhosh Kumar, Vice Chairman, ANAROCK Property Consultants Pvt Ltd was of the view that this decade and century is going to be India’s. “The GDP is better than many other countries, FDI is coming to the country and globally India has a strong economic and geo-political positioning. Riding on these positive sentiments, the residential real estate sector after going through a tough 10 years has bounced back and the office, retail and warehousing sector is seeing major investments. The realty sector continues to contribute 13% to the GDP, though issues such as inflation and rising home loan rates are a concern,” he said. Manoj Gaur, CMD, Gaurs Group believed that given the huge latent demand for housing in India, there will be no impact of recession in the real estate sector. "We are progressing towards development. The growth story of real estate has begun in the last decade and I don’t see any effect of globalization on the real-estate sector. There will be a minor impact on FDI or investments but internal demand is high. RERA regulations and market stabilization has created a growth environment for the sector. The market has absorbed the recent repo rate hikes and the home loan rates are still within acceptable limits. The rising inflation and cost of materials is a challenge and government initiatives are required on that end,” Mudassir Zaidi - Executive Director - North - Knight Frank India agreed that while on various fronts Indian economy is influenced by global happenings, housing is one segment that remains un-impacted given the vast domestic demand. “If you look at affordability the home prices have remained stagnant since 2012-13 till last year while, the earning levels have gone up. As per Knight Frank affordability index, Ahmedabad continues to remain the most-affordable housing market with an affordability index of 22 per cent followed by Pune at 26 per cent and Chennai at 27 per cent. Mumbai is the only city whose affordability index is improving at the rate of 4 per cent — from 53 per cent in 2021 to 57 per cent in the third quarter of this year. Hyderabad’s home purchase affordability index improved from 53 per cent in 2010 to 33 per cent in 2019. NCR affordability index has been fluctuating year on year. From 48 per cent in 2010 improving to 34 per cent in 2019. From investment perspective, majority capital is getting invested largely on the commercial side, though some slowdown on the fund flow is expected because there is some level of caution given the global scenario. Co-working should really take advantage of that because flexibility is what most of the occupiers will look at but on the whole, the next decade will be of Indian real estate.” Pradeep Aggarwal, Founder & Chairman, Signature Global said, “I am very much bullish on Indian real estate. Many reforms have taken place for the first time which were not seen in the past 6-7 decades such as GST and RERA. A regulatory body plays a disciplinarian role which benefits both the promoter and the consumer. When we are talking about the 2030 and 5 trillion economy, the real estate participation in GDP is expected to reach up to 15%. If the numbers reach 15% it becomes a big opportunity for the developers. I strongly advocate bringing affordability to housing to fulfil the need of the common man and ultimately affordable housing is an earning point for the government also. We have invested Rs 150 crore in technology only to build fast construction and with this technology, we delivered more than four crores square foot in the last 6-7 years.” Dharmesh Shah, CEO, Hero Realty added, “The rot in the system is getting cleared and the corporate governance among realty firms is on the rise and the consolidation in the industry is going to help the corporate players. India today has 12-15 billion dollar real-estate market that will grow by 2030 to 5 trillion. We are getting benefitted as an organisation and have seen this year, phenomenal sales growth and expansion across Gurugram and Mohali, The realty firms are working in JV to complete projects which is a sign of a maturing sector. We as a real-estate player should look at the consumer from an FMCG point-of-view. Today, customer has become more knowledgeable due to social media and travel. They demand product innovation, value for money, lifestyle amenities and after sales service and is ready to pay 10-15 percent more premium for it.” Pradeep Misra, Chairman & Managing Director – REPL was of the view that apart from the organic demand for real estate in a city, government need to induce demand to boost the realty sector. “The infrastructure development, building airports, creating SEZs and implementing Gati Shakti plan are some of the ways to create demand for various real estate asset classes. States with port and industrial corridors show better GDP and creating employment generating infrastructure across states and cities will raise per capita income indirectly giving a push to the real estate demand as well.” Avnish Sharma, Partner, Real Estate, Khaitan & Co. concurring with other experts stated “Indeed RERA has been the right step in the right direction and we have achieved a lot in terms of consumer confidence and transparency in the sector. However, the delays in settlements has been the major issue plaguing the system. And as pointed out by the apex court, it isn’t about increasing the number of judges but to have the right people in the right position to dispose the matters who understand the sector. Giving RERA more teeth is going to help because there is a multiplicity of forums like NCDRC, NCLT etc. where people go. Apart from that coordination among multiple agencies such as land records, local sanctioning authority etc. becomes a spoke in the wheel of smooth functioning and quick resolutions.” “Global recession will impact the real-estate market but India has a habit of surviving this kind of recession. As developers, having the right intent is important to see future growth.” Dharmesh Shah “Reducing GST on materials for affordable housing and lower stamp duty among other incentives will give a boost to affordable housing. I feel the coming times are for affordable housing and it will be the growth driver for the real-estate sector. In mass housing, volume is the key to get profit margins. Construction technology plays an important role in saving cost and time that translates in profits.” Pradeep Aggarwal “From 2012 to 2014 the home loan interest rate was 12-13%. Today it is 8.6- 9% which is much lower. If it goes beyond that, it may impact the purchase affordability and purchase decisions of homebuyers. There is a huge amount of demand for affordable housing that will continue to bloom.” Santhosh Kumar “There will be a cascading effect of the international market downturn and large organisations laying off their staff on Indian real estate demand, especially impacting the growth story of the start-up. Layoffs in the international market is a concern.” Pradeep Misra “Land prices are going up with large infra projects increasing connectivity and economic growth of the regions. In terms of real estate this works in a contrarian way as well. With increased connectivity the more suburbs and peripheral areas open up for real estate, thereby driving down or stabilizing the property prices.” Mudassir Zaidi “We have to rescue ourselves from this temptation that all is going well. Financial discipline and the financial closure of the project is important. Don’t be greedy. Focus on delivery.” Manoj Gaur “One of the big issue courts have taken cognizance of is the clauses in agreements that are imposed on buyers by developers to get away with unfair practices. It needs to be a concerted effort from the government and the developer’s in terms of maintaining fair agreements and flexibility of timelines. Also, the role of brokers in the real-estate regulation act is something that needs further elaboration. A lot of these issues will get resolved if the RERA authorities act as a facilitator to the industry rather than regulators.” Avnish Sharma
Tags : global property market trends Indian Realty Santhosh Kumar Vice Chairman ANAROCK Property Consultants Pvt Ltd Manoj Gaur CMD Gaurs Group Mudassir Zaidi - Executive Director - North - Knight Frank India Pradeep Aggarwal Founder & Chairman Signature Global Dharmesh Shah CEO Hero Realty Pradeep Misra Chairman & Managing Director – REPL Avnish Sharma Partner Real Estate Khaitan & Co