From the lows of 2009, to a rise in 2010 to an almost stable 2011 and now amidst a cautious 2012, the real estate sector in the country has come a full circle today. Stepping into 2013 won’t be a challenge if a vigilant stance is adopted. Confederation of Indian Industry (CII) organised the CII Real Estate Conclave 2012, a full-day event based on the conservation, consolidation and growth. Anuj Puri, Conference Chairman and Chairman and Country Head, Jones Lang LaSalle, in his welcome address said that 2011 was a landmark year with record construction and growth in the residential space. “Absorption rate was strong and upward swing was in process. With the economic downturn, 2012 became a sort of reality-check and supply has been going up, but absorption has come down. The scenario is less predictable and there is a great challenge. This challenge however, is also an opportunity,” he said.
He added that it is time is to conserve, consolidate and grow individually and as an industry. According to him, the need is to increase transparency to improve investor and buyer confidence, work towards easing out of regulatory framework and increasing and developing skilled manpower.
Firdose Vandrevala, Chairman, CII National Committee on Real Estate and Housing and Chairman and Managing Director HIRCO Developments Pvt Ltd. gave the special address where he touched upon how even though the construction business is the second largest employer in the nation after agriculture and accounts for 10% of the nation’s GDP, it has not been accorded industry status, thus keeping benefits from financial institution, lower interest rates and easy approval processes away from the industry. He pointed suggestions for the nation’s growth and how real estate can play a role in it. “To keep up its growth, India need to urbanise quicker, build more cities and reduce graft and corruption because they channelise money away from productive investment,” he said.
A CII JLL joint report titled ‘Indian Realty – Through The Looking Glass’ that highlighted the key trends in office, retail and residential space in the country was also released at the conclave. The report mentioned that Indian cities rarely follow property cycles in tandem, in the residential sector. However, the tier 1 cities of Mumbai, Bangalore and NCR-Delhi, typically tend to lead the cycle. Mumbai was the first city to witness appreciation in residential prices in the third quarter of 2009 with the strongest increase in second quarter of 09 peaking at about 8.0% in the fourth quarter of 2009. Prices in other cities also rebounded after the third quarter 09, but at a slower pace than Mumbai. It also mentioned that residential property appreciation has slowed down in 2011, however, not in all markets. The prevailing capital values are well beyond the previous peak witnessed in the third quarter of 2008 in Mumbai, Bangalore, Chennai and Kolkata.
The panel discussion – ‘The Indian Real Estate Boosters- Unlocking the logjams in order to fast track real estate development in India’ focused on identifying the allies and acquaintances that could bring efficiency, reduce costs and give a boost to the realty sector. Gaurav Gupta, Director, Omkar Realtors & Developers Pvt Ltd, said that the new DCR rules bring in more transparency, but still there exists the problem of getting approvals. Sachin Sandhir, Managing Director, RICS South Asia was of the opinion that although the realty sector is simple, it is complicated due to high interdependencies. Any delay by one agency cannot be covered by the other, and hence things get complicated. For the real estate sector, till now, every delay would only result in profits. However, with more transparency and international practices being followed, the sector has to move towards more efficiency.
The ‘Reassessing Residential-Safeguarding Returns from Luxury, Mid-Segment or Affordable’ focused on the point that while luxury homes were always an attractive segment, the affordable housing segment is still lagging behind. So, how could developers balance across the affordable, mid-scale and luxury spectrum to extract the best returns on their projects. Sandeep Runwal, Director, Runwal Group, said, “Changes that are made today are adhoc. Developers have to seek multiple permissions from the government and there is no urgency seen from the latter’s side. In case of affordable housing, there is always a two year delay and thus capital increases by 30-40 per cent.” Dharmesh Jain, Chairman and Managing Director, Nirmal Group of Companies pointed out that if someone was sitting on a file for six months, he should also be answerable.
Developers are also of the opinion that the real estate sector is not even given a chance to see if the policy set works or not. Boman Irani, Chairman and Managing Director, Rustomjee Group said, “Every time a said policy becomes successful, it is tweaked. At least, the developer community should be given a minimum time for a policy to be successful.” Abhisheck Lodha, Managing Director, Lodha Group was of the opinion that India is the only place where people are happy if housing prices fall. The worldover, housing prices are key indicators of wealth. Real estate is a high risk business and hence has optimal returns.