Realty Plus, a leading real estate monthly from the exchange4media group, successfully organized a real estate conclave in New Delhi on January 23 wherein key stakeholders discussed the current scenario threadbare and formulated a roadmap for this sector

kumari Selja, Union Minister of State for Housing and Urban Poverty Alleviation, inaugurated the event with the meaningful statement that “we need to look at the macro and micro economic factors leading to the current scenario and challenging dynamics of the real estate sector. ”

Talking about the announcement of two stimulus packages with special focus on the housing sector, she said the “government had injected more money into the economy, widened access to foreign funds and lowered tax rates while increasing the budgetary spending. The Centre is also providing cheaper loans to the urban poor in the form of interest subsidy of 5% per annum for a Rs 1 lakh loan for the economically weaker section (EWS) and low-income group (LIG) housing.”

In his welcome address, Anurag Batra, Editor-in-Chief, exchange4media group, emphasised the need for infusing professional talent into the sector, Batra underlined that “brainstorming and introspection at such high-end forums will help improve the quality of people entering the real estate industry which will in turn deliver quality to end-customers and bring the sheen back to the sector.”

In the run-up to the conclave in which Cushman & Wakefield (C&W) was the knowledge partner, and Jones Lang LaSalle Meghraj (JLLM) the conference partner, Realty Plus editor, Vinod Behl, had a one-to-one interaction with Kumari Selja. During the Q & A session, the Union Minister made some key policy statements, like her ministry’s plan to bring about a Model Regulatory Act.

The day-long engaging deliberations at the conclave was big draw with prominent developers, property professionals, consultants and policy makers discussing and debating key issues with a view to evolve a strategy to revive the real estate sector.

Tackling The Slowdown

The conclave opened with a panel discussion on “Real Estate Slowdown: Threat Or Opportunity.” Giving an insight on the winning strategy, Sanjay Verma, Executive Managing Director (South Asia), Cushman & Wakefield, opened the session by declaring that “developers who have a strong business model and the ones who plan ahead will definitely emerge victorious in these troubled times.” The panelists discussed their views on the current real estate slowdown and each one of them spoke about the measures they would be taking as builders to enrich their companies and in turn the real estate industry. For SK Sayal, CEO, Alpha G Corp, the steps would be continuation of the best practices, transparency in their dealings and delivery of projects on time to attract customers. He predicted that fly-by-night operators were bound to disappear in such challenging periods.

Pranav Ansal, Managing Director, Ansal API (Ansal Property and Infrastructure Ltd.), for whom realty has been a family business handed down from generations, was forthcoming in his view that “lack of a proper regulatory body has prompted many unprofessional and unethical players to enter this sector and lead to its ruination.” Zeroing in on the Indian market he was certain that very few would survive the current turbulence.

Ansal API is now focusing on providing more affordable homes for tier-I and tier-II cities. Meanwhile, arguing that there is little realisation of the importance of urban and environmental planning even at the government level, Sunil Aggarwal, MD, South Asian Real Estate (SARE), stressed the validity of these aspects on which his group has decided to do win-win transactions.

“If we don’t look into these aspects now, it will harm us in the long-term certainly,” he declared. Going overboard on engineering and design was, in Aggarwal’s opinion, not wise.

Yash Gupta, CEO, Hines India elaborated that the current focus is on consolidation of operations, building of partnerships and greater professionalism.

Sachin Sandhir, MD, Royal Institution of Chartered Surveyors, India, hoped that the real estate industry will adopt best practices and follow good standards.

“Our statistics shows that around 2,000 million people will move from rural areas to urban cities and it is the responsibility of the realtors to develop more affordable houses, which is the need of the hour,” he added.

Sandhir also pointed out that the RICS mission was to work towards elevating the standard of professional performance in the Indian real esate and introduce international practices. RICS is a leading organisation of its kind in the world for professionals in property, land and construction.

Challenge Of Liquidity Crunch

As the downturn has engulfed the entire real estate sector, almost all big or small developers are facing resource crunch, making it difficult for them to complete their ongoing projects. Some are going slow on construction; a few have stopped work and are delaying their expansion plans. This slowing demand scenario, coupled with high interest rates and rising input costs, have added to their problem.

Hence, these companies are now desperately looking for sources to meet their capital requirements including new methods to reduce their construction costs.

This session on “Coping With Capital Crunch: Challenges and Innovations”was meant to find new ways and ideas to tackle this situation.

The panelists of this session included industry captains like Chris Thorne, Chairman, IVSC and Technical Head, Atisreal UK; Rohit Malhotra, CEO, Realtech; Parry Singh, MD, Redfort Capital; Aditya Bhargava, MD, SITQ India, and Anoop Pabby, Executive Director, Deutsche Post Home Finance. The moderator, Anshul Jain, CEO, DTZ, set the ball rolling by throwing light on the current realty scene, elaborated on the different aspects of liquidity crisis and raised several issues for discussion.

Chris Thorne was asked to share his views on the methodology of the evaluation practices that’s applied in UK to cut down on costs of construction by his company. In reply, Thorne stated that their primary step is to hire a third party to evaluate their project construction cost to exactly allocate the areas where they can be trimmed. Parry Singh added that his company too followed the same process. According to him, “we too appoint a third party who reviews our construction cost as well as the quality,” he said. But, by virtue of experience, he recommended to his industry counterparts the adoption of value engineering which, if incorporated effectively, can cut costs to a great extent.

Aditya Bhargava laid stress on the private equity model. He said, “In the current scenario when financial institutions are also keeping away from funding the industry, the primary way to tackle capital crunch should be application of private equity model in the projects.”

According to Anoop Pabby, “If there is a good project, you will have the buyer for sure. The most important thing to support real estate in coping with capital crunch is to have smooth inflow of credits. If credit freezes, the real estate cannot function.” In Rohit Malhotra’s opinion, the business would get back on track the moment liquidity gets injected in the system. The reduction in interest rates on housing loans will help boost the demand for real estate.

Smooth Sailing For Luxury Homes

The theme of this session was “Bucking The Slowdown: New Trends In Luxury Housing’ and the panelists who participated included Manish Kashyap, MD, CB Richard Eillis; Rajeev Rai, VP, Assotech; Rajesh Arora, CEO, Arora and Associates; Navneet Chak, Regional Director, Sobha Group; Sanjay Khanna, Director, Kailashnath Developers; and Sunil Aggarwal, MD, South Asia Real Estate(SARE).

The session began with a deliberation on the definition of luxury. “Luxury is to enjoy exclusive services that make life more comfortable,” said Manish Kashyap while moderating the session. “Luxury housing is a niche segment and a growing one in our country and there are several avenues where lots of consolidations can be done to defeat slowdown,” he added.

Another point that was brought into the vanguard came from Sanjay Khanna. He affirmed that “if you decide to develop a luxury housing project, your target segment should be very well defined” for effective sale Sunil Aggarwal pitched in by saying that “luxury housing segment cannot be mass-produced. Location as well as the price point are of prime importance as one has to satisfy the customer’s urge to feel proud of owning an exclusive apartment.”

Speaking on the changing trends in this segment, Navneet Chak underlined that the “luxury housing segment is still growing in India. The customer wants world-class amenities and are not willing to compromise. They compare projects with those in Shanghai and other parts of the world.” Rajesh Arora endorsed Aggarwal’s view by saying that the” customer who opts for luxury housing searches for two basic things, uniqueness of the project and a good location. But these days several new developers have emerged promoting their so- called luxury housing projects that lack even the basic needs of luxury.”

Contrary to the slowdown mania that has gripped all the other sectors of real estate, the luxury residential properties in India have shown no or less signs of slackening as for now but precautionary measures should be taken by the developers well in advance before the situation worsened. This was the unanimous view of all the panelists. According to Rajeev Rai, the luxury housing segment in India is untouched by slowdown as India has world’s largest and a growing HNI population.