INDIAN REALTY IN REAR-VIEW GOOD BAD AND WHAT’S NEXT
Arpit Mehrotra, Managing Director, Bengaluru & Head of Flex, India, Colliers led the conversation by stating, “Last 2 years were tough for real estate given the covid pandemic induced slowdown. Currently we are witnessing the rising inflation, especially the increase in input costs for the projects that may dampen the positive sentiments. Despite, these challenges, the real estate has tremendous growth potential in the coming years if right measures are taken by all the stakeholders.” Farook Mahmood, CMD, Silverline Realty Pvt. Ltd was of the view that the current situation has to be looked at from the right perspective. “I would say it has been a learning curve. There has been a jump of about 30% in raw materials cost as well as labour and we have an import problem from various countries. So, Make in India is going to be the key to success for the country. In terms of real estate market, we have come out of the woods, and despite the cost rise, there have been record sales across cities. Indian economy with its resilience has come out shining and there will be a lot of growth in the realty market. I am very bullish on this.” Madhusudhan G., CMD, Sumadhura Infracon Pvt. Ltd added, “Low-cost housing has seen the major impact of price increase. I believe, low cost mass housing is not viable in metro cities due to the high land cost and cost of various approvals. Pre-Covid the share of affordable homes used to be 30-40% in launches. In the latest report, the affordable homes have dipped down to less than 10%. Apart from the rise in cost, another reason of lesser affordable housing sales, is the buyer’s preference for premium projects with amenities. The luxury housing sales has increased, the preferred ticket size is going up and larger unit sizes are more in demand. On the accumulated inventory, Pre-Covid it was four years inventory and now it is hardly 10 quarters inventory as per the latest data. India is emerging as a strong alternative to China for manufacturing and combined with India’s own initiative of ‘Make in India’, we have a great economic progress on horizon and real estate will be a major contributor to the 5 trillion economy.” Ashwinder R Singh, CEO- Residential, Bhartiya City shared similar sentiments, “People keep talking about rising home loan interest rates having an impact on EMI but, the rentals for the first time are much more than the EMIs. Capital values are going up, investors are back. Almost 80% end users want to upgrade their homes and presently real estate market is less speculative and more end user driven. Average ticket size is going up and there is FOMO among the buyers i.e. ‘Fear Of Missing Out’. If the product launched is good and by a credible developer people don’t want to miss out on the opportunity. For next 3-4 years I see a very sustainable, consistent growth in demand.” Bhaskar T. Nagendrappa, Co-Founder & Jt MD, Habitat Ventures, President - CREDAI Bengaluru expressed, “Everything is connected to the sentiments of homebuyers. Bengaluru is a market that is not an investor-driven market but an end-user-driven market. Every city went through some or the other turbulence and disruptors but Bengaluru being the IT capital, with the highest absorption in the IT space, recovered fast from the slowdown as people took the opportunity to upgrade to bigger homes. And with people coming back to work, the absorption in both commercial and residential space is on a steady rise. An important change has been that the real estate market now belongs to organized players.” THE NEW BEGINNINGS As per Madhusudhan G, 2008-2013 was a bull run in terms of real estate absorption and units sold per year. “If you see the home loan interest rates, they were 18-13% per tenure from 2008- 2013. From 2013 till now the interest rates have come down to 8.5 %. The inventory piled up for years together. However, because of the demographic dividend, and domestic resilience, the domestic consumption growth story is still intact. So, despite the interest rates hike, that is still remains lower than past years, it will not have a major effect on the extent of the consumption of residential properties or otherwise going forward.” Farook Mahmood agreed, “I don’t see recession happening in India. There have been things like job retrenchment but it's not a major issue. The Covid has separated the men from the boys and we now have more professionalism and accountability in the system. The Millennial population that was once averse to buying home is now investing in real estate and the inventory that is left from two years is much cheaper to buy right now. Prices are going to go up in coming years, but that is the phenomenon we are going to live with.” Arpit Mehrotra added, If the US is in trouble India will come back very strongly if they have to put down investment. Europe is in trouble. China will not happen and the kind of human capital and skill set India has, it will be much in demand. So, I am much optimistic about the future growth of Indian economy and its domino effect on India real estate.” Ashwinder R Singh talking about tier- II realty market shared, “There is a growing demand in cities like Jaipur, Mysore, and Chandigarh. We have seen new developers coming in. It is all a matter of core competence which is about having a very good team and on-ground execution. You don’t want to start getting aggressive, and blame the market, if you end up making a mismatched product. The real estate demand in tier II definitely booming, though the margins are lower. We are in the business of managing risks, if you can manage risk, and price your product well there is no harm in selling slow also. If you want to go to tier II, it is a completely different strategy where you price it well, you can’t price it high or low, you have to look at profitability.” Bhaskar T. Nagendrappa, “There are more opportunities now in real estate but they are price centric. Unfortunately, in Karnataka, affordable housing is not implemented to the fullest extent that it should have been. Urbanisation is reality but suburbanisation is the truth. The migration is happening to a large extent towards the suburbs where the density is increasing but the infrastructure is still lacking. Tier-2 cities have got a future and it’s just a matter of time before many more opportunities will open up. The biggest contributor will be e-commerce and ’Make in India.''
Tags : Indian Realty Make In India growth challenges Arpit Mehrotra Managing Director Bengaluru & Head of Flex India Colliers Farook Mahmood CMD Silverline Realty Pvt. Ltd Madhusudhan G. CMD Sumadhura Infracon Pvt. Ltd Ashwinder R Singh CEO- Residential Bhartiya City Bhaskar T. Nagendrappa Co-Founder & Jt MD Habitat Ventures President CREDAI Bengaluru