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Realty Plus Team  
Gazing Into Realty 2012

Realty Plus spoke to a broad spectrum of luminaries from the real estate world and other eminent stakeholders to know their views about the outlook for the sector in 2012

 
Pradeep Jain, Chairman, Parsvnath Developers Limited:

Though it was expected in the beginning of 2011 that the year would prove to be fruitful and beneficial for the real estate sector, but it was all surprise and blows that we received the entire year. Right from agitations against acquired land to the draft land acquisition bill, from all time high input costs to piling inventories, there was nothing exciting for developers like us.

We expect a decrease in REPO and Reverse REPO rates by the Central Bank (RBI) shortly, which will boost GDP growth. This will also result in reduction of home loan interest rates and liquidity must be good.

The year 2012 shall boost commercial and retail real estate sector as several IT and ITES companies are looking to pre-lease there office spaces to take advantage of the lucrative offers currently being proposed by office space developers. Also, as these companies will consolidate and relocate themselves to SEZs to reduce operating cost and avail related tax incentives, this promises to push demand further and thereby the prices, albeit marginally. As major Indian retailers are seeking to implement their expansion plans in the prime cities as well as select Tier II and Tier III cities, enquiries for quality retail space will remain robust. The proposed amendment in FDI in retail promises some shiny days ahead, though it is too early to comment on this. Funding problems will persist this year as well for the entire sector until government puts forward efforts to streamline supply side mechanism which in my opinion, is the only hope for growth.


Navin Raheja, CMD, Raheja Developers & President NARDECO

Farmers agitation has impacted real estate sector badly. In fact, buyers are not willing to invest in a project which is being built over land acquired by the government and given to private developers for development. The banks have become very cautious in granting project finance as well as home loans to buyers. In some areas, land rates have also gone up substantially. Foreign investors are ranking India as high risk market.

Availability of cheap and easy home loan play a critical role. As per our estimate, almost 60 to 70 per cent home buyers opt for home loans particularly in case of first home buy. Increase in home loan has impacted affordable and mid-income housing segment and the market is witnessing drop in demand to some extent.

The much-awaited Regulatory bill will bring transparency and disciplne in real estate. The confidence of domestic as well as foreign investor will increase and sector may witness organised growth. However, there are certain aspects which are still missing in proposed regulatory bill such as safeguards for developers against malpractices, multiplicity of litigation, dispute resolution mechanism etc, which must be resolved too.

Presently, the Indian real estate sector is facing problems of land acquisition, high borrowing cost, high input cost, availability of capital and effect of high inflation. In 2012, based on present scenario, we feel that the market will be innovative and focus will be on high-end residential development. Secondly, opening up FDI in retail sector (100 percent in single brand ) will boost the logistic parks and retail space. In case government succeeds in allowing FDI in multi-brand retail, this will be another boost to commercial real estate development, which is not doing very well since last few years.


Mayur Shah, Managing Director – Marathon Group:

The government is likely to be more supportive towards developers and is considering issues like delays in approval, increase in FSI rates, improvement in infrastructure, to name a few. Inflation and rise in repo rates are likely to be in control. Considering such factors, we are positive that the solutions in the near future will facilitate builders to provide better housing facilities for the potential buyers. The proposed infrastructure developments, along with easing of interest rates, are expected to boost the real estate sentiments further.


Manoj Gaur, MD, Gaursons India:

Ihope there will be a lot of change happening in the real estate sector in 2012. As availability of land is decreasing, developers are using new technologies and designs. There is added focus on green, eco friendly and high-rise buildings. Last year we were talking about affordable housing under the bracket of Rs20 lakh-Rs40 lakh but this year the definition of affordable segment will change and this bracket will go up to Rs35 lakh to Rs50 lakh . As the Noida authority has increased the FAR, allowing developer to construct high rise apartments, it will increase the quantity of residential units.

The year 2011 was not good at all for the real estate sector, and sales dropped in the prime cities of India. In Delhi-NCR, the Noida sub-market had led absorption over the past 11 quarters but witnessed a decrease in 2011. Home buyers had tough times against the backdrop of lack of transparency, high home loan rates, old land acquisition policies, weakness of regularity systems and many more. But in 2012 , we are expecting a new land acquisition bill and real estate regulatory bill which will put more transparency into the system.


Pranab Datta, Vice Chairman & Managing Director, Knight Frank India:

In terms of the residential segment, the deadlock between the buyers and developers should break in favour of buyers. As this happens, the pent up demand from the section of buyers that are sitting on fence in anticipation of price correction would translate into improved fortunes for residential property market. Employment scenario, inflation and interest rate will have their role to play and hence cues from the government action will be keenly observed.

In terms of the commercial office market, the performance of the service industry has a significant bearing. The slowdown in global economy which impacts the Indian BPO sector and muted expansion plan of domestic players will exert pressure on the commercial office property market. The commercial office market shall continue to remain subdued on account of weak global and domestic economic indicators. As policy deadlock breaks and reforms gather steam, leasing activity shall improve. However, rentals will remain under check on account of a strong supply pipeline in major commercial centres.


Anil Kumar Sharma, CMD, Amrapali Group:

2011 has thrown numerous issues and challenges in the realty domain. It saw numerous upheavals and this has made the realty domain more vigilant and responsive to demand and supply. The year ultimately saw India’s real estate market recovering from the global economic downturn. Seeing the present scenario of the real estate sector in Delhi-NCR, it can be said that the property rates will not go down. To a certain extent, the prices may increase to about 15-20 per cent or more. A vivid glimpse into the new year unfolds a burgeoning Indian real estate with augmented supply of affordable housing by builders.

We intend to bring in pre-cast technology and advancement in our architectural and building development. The unfolding year would definitely witness a boost in the realty sector.


R K Arora, Chairman & Managing Director, Supertech Limited:

We are very optimistic about 2012 as we foresee a lot of demand, be it in the residential or commercial segment. Also, the Government being very supportive with the kind of policies implemented and the regulations formulated in the current past, is a positive sign for the real estate ndustry as a whole. But the year can witness rise in the property prices due to increased raw material cost, land cost and various taxes.


Irfan Razack, CMD, Prestige Group:

2011 has been a particularly good and vibrant year for the realty industry in South India, especially Bengaluru. In the backdrop of poor growth in global economies, India continued to be resilient. We expect this positive reaction to continue into 2012 with a healthy Q1 (calendar year). The year has also seen good response in the residential segment in both the luxury and the mid-segment. The commercial and retail segments have also witnessed steady and robust leasing through the year. On the Prestige front, 2011 has been a great year as the company achieved the maximum sales ever clocked in a single year. We had four major launches including Prestige Tranquility, Prestige Edwardian, Prestige Sunnyside and Prestige Parkview, this year alone. We have completed 3.62 mn sq ft in 2011 with an additional 32 mn sq ft currently under construction.

Future gazing, 2012 looks extremely promising with several exciting launches planned including Prestige Bella Vista, a residential development set amidst 25 acres in Porur, Chennai. We are also launching Prestige Mayberry, premium villas in Whitefield, Prestige Summer Fields, a mixed-use development consisting of villas, apartments and commercial office space as well as Prestige Silver Crest, a residential development on Outer Ring Road, apart from several other projects. We will also inaugurate Forum Vijaya Mall in Chennai and Oakwood Prestige Premier Serviced Apartments in the Forum Value Mall during this period.


Manju Yagnik, Vice Chairperson, Nahar Group:

The year 2012 is poised to be a promising period for the Indian realty sector. The pointers in this direction include increasing demand growth in all its segments, unstable market conditions in UK and Europe driving foreign investors to India, strengthening of dollar and other currencies attracting NRIs, rise in the lending to housing by Indian banks and tremendous improvement in infrastructure that is creating new destinations. The demand for commercialand retail spaces is expected to surge significantly. Several housing projects have already been launched and a significant number of land deals have been executed. Yet another encouraging fact is the significant increase in lending to the housing sector by Indian banks in 2011.

Retail sector is already buzzing with activity in urban cities and even smaller towns, which is now accelerating because of the possibilities of Government allowing FDI in multi-brand retail.

During 2012, I expect a significant increase in demand for high quality property in major cities which are already witnessing a good response to residential projects of premium and luxury homes from corporate executives, younger generation from HNI families and businessmen and NRIs. Moreover with the recent strengthening of US dollar and other currencies as also increased interest rates, sizable number of NRIs are seeking to invest in Indian real estate. Prices, therefore, are unlikely to see any major correction in the year.


Snehal Mantri, Director Marketing, Mantri Developers Pvt Ltd:

The Indian real estate industry kept riding through highs and lows in 2011. Speaking about 2012, the industry will see some positive change as the global economic performance will improve and so will the Indian market.

In terms of residential segment, we can see many prominent and promising projects in the pipeline being launched down south. With more inflow of NRIs and expats in India we will witness growth in demand for luxury and super premium homes.


David Walker, Executive Director, SARE Homes:

Clearly, we are facing global headwinds and their impact on the Indian economy may hit the absorption rate in some micro markets. This will exacerbate pressure on over stretched developers with inventory overhang who are suffering slow sales and liquidity constraints. The key differentiator will be well-capitalised funds who are able to meet their execution obligations and deliver units of good quality to consumers on a timely basis.

The expectation of lowering of interest rates coupled with softening of construction cost is expected to boost the end-user demand for housing in 2012.


Harindra Nagar, MD, Paras Buildtech India Pvt Ltd:

Real estate in 2011 went through a lot. To name a few, it witnessed land acquisition row, launch of skyscrapers and FDI issue. The dampening effect though was brought by the spate of hikes in interest rates by the Reserve Bank of India. The residential market remained sluggish. However, the real estate market is looking towards the New Year with lots of hope. Not only the developers but buyers are also looking for some respite that will help them fulfill their dreams of owning a house. Some parts of Gurgaon might see higher sales in new launches.


Brijesh Bhanote, Director, Sales and Marketing, The 3C Company:

We see a lot of change happening in the year 2012 as there is most likely to be a marked difference in real estate developers who deliver on time from the ones who don’t. There have been positive signs from the finance ministry and the economy is also expected to witness a boost owing to decreasing inflation. India is poised to become one of the most attractive investment destinations for real estate in 2012.

As the demand for safe projects is increasing, buyers are making trustworthy choices in the uncertain property market scenario. Property prices may go up in the range of 10 per cent to 50 per cent and return on investments in projects especially those that are being delivered or are nearing completion is looking attractive.

Going forward, we believe that the office space supply is expected to supersede the demand in most prime cities of India. Owing to the global economic situation, corporate expansion activities are likely to decrease that is bound to have a significant impact on business budget estimations for next year. Recently, the industry witnessed increase in raw material cost that added to the burden on many developers and buyers. Hence, real estate industry will get more experimental in the coming year and may introduce newer methods of construction. Alternate materials/technologies may also be identified to replace the conventional materials for building projects. We as responsible developers are channelising our energy to adopt newer skills and energy efficient construction material, which is required for the next generation of buildings, to make them sustainable in every form, function and use.


 
 
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