One important factor for every asset class in real estate is the sentiments and confidence of the sellers as well as the buyers. The sentiments defines where the market has reached and the confidence indicates where it is going. Gulam Zia, Executive Director Valuation & Advisory, Retail Hospitality, Knight Frank India Pvt Ltd said, “Sentiments play a huge role in residential compared to the other asset classes like commercial and others. Earlier what was always considered most critical in real estate was location and location while doing a project but today, it is what are the 'market sentiments' that drives this industry. Residential, I believe that we are closer to peak and in other classes like warehousing, commercial centres and office, we are just scratching the surface.”
As per Sunil Rohokale, MD & CEO, ASK Group “Today, developers rely on prudent lenders and customer funding. Earlier developers were busy doing land banking which is not the case now. Now we have a fear of RERA and the sentiment is positive. Developers' profits and growth aren't indicative of consumer demand. We must distinguish between these two metrics. India's real estate market growth is not reflective of the markets in each micro-market of various cities."
Charu Thappar, Executive Director- Property & Asset Management, AsiaPacific, Head – JLL agreed, “The outlook appears extremely positive, driven by the growing middle class and urbanization. Demand in tier 1 and 2 cities is fuelled by people's aspirations. Commercial real estate, remains a favoured asset class for foreign capital and housing and logistics are performing phenomenally well. So overall the sentiment is positive. Last year, property values surged significantly, and this year's economic indicators are promising. Setting aside geopolitics, in residential real estate, scope for growth remains, albeit modest. While a massive surge is unlikely, some upward movement is still possible in the market.”
Elaborating on the sentiment aspect on the warehousing segment Girish Singhi, Co-Chief Investment Officer - Welspun One said, “Warehousing is a specialized asset class. The amount of capital flow has al- ways been higher than commercial and residential, even when there was slowdown. Currently, this sector has been in a structural bull run which is demonstrated by not only pricing action but also volume.”
Sharing his views Chaitanya Seth, Partner Consulting – Real Estate, EY India said, “The opportunity real estate sector gives is phenomenal. Today real estate industry contributes around 7-8% of the GDP. In the next 10 years it will give 15% or plus. As the industry is gradually getting organized, it is poised for immense growth offering the buyers, investors and developers a plethora of opportunities. About 20 years back it was a sellers’ market but now it has changed to a buyers’ market. Digital revolution has also played a very significant role putting a lot of pressure on the . The focus is completely shifted to delivery and customer experience.”
Amit Goenka, MD & CEO, Nisus Finance Services Co Limited added, “This space has extraordinary opportunities for creating impact for transformation, corporatization and institutionalization for making it a fully global facing asset class. The sector has been innovating very fast over period of time with new asset classes, geography to different kinds of partnerships. It is a very vast and complex subject. It’s very dynamic and that keeps on changing very frequently. India's real estate sector is less than 20 years old. The first impactful FDI in 2005 marked a turning point, transforming contractors and brokers into developers. The last 20 years have seen significant growth. Four major events between 2016-2021 - RERA, demonetization, GST, and insolvency/bankruptcy laws - have radically transformed the sector, making it investible."
CHANGING PERSPECTIVE
As the industry improves, becoming larger and more predictable, buyers gain confidence in developers' credibility and delivery. Sunil Rohokale added his perspective, “Affordability remains a concern, driven by interest rates and price per square foot. In Noida, for instance, Rs 1 crore can buy five properties, whereas in Mumbai, Bangalore, or Hyderabad, it can only buy one. This disparity makes prices in certain markets worrisome, with rapid growth potentially leading to a bubble. Despite this, I foresee steady growth for the next 3-4 years.”
Elaborating on the rising profes- sionalism in the sector, Chaitanya Seth said, “The regulations now demand bold thinking, top-notch customer experience, and accelerated growth. Developers now are enhancing their processes for project execution time reduction, stream- lining investments and adding to customer experience. Execution is the big challenge, be it capability or capacity.
Ambar Maheshwari, CEO, Indiabulls Investment Management Limited expressed, “Sentiments are collective and contagious. Real es- tate is a cyclical industry. Currently we are in a positive cycle. However, India's real estate market has unique challenges. Unlike Dubai, a global hub with $50,000+ per capita income, India's per capita income is just $2,072. We often overlook two key points, India's 80% home ownership is driven by self-constructed houses and government initiatives, and there is dichotomy between India's GDP and mortgage percent- age compared to Dubai and China. China sells over 1 crore apartments annually, contributing 30% to its GDP. In India, mortgage penetration is relatively low.”
Amit Goenka advised, Let’s stop looking at projects as if they are a piece of art, instead developers should see them from manufacturers view as a consumption product by the masses."
Four major events -RERA, Demonetization, GST, and insolvency/ bankruptcy laws, have radically transformed the sector, making it investible.
The buyers' sentiments define where the market has reached and the investors' confidence indicates where the market is going.
