From ET Realty
After a prolonged slowdown, the real estate industry is now hoping that new measures by the government such as housing for all and opening up of foreign direct investment alongside softening of interest rates could bring in the much needed push for the sector. ETRealty.com spoke to Omar Gull, marketing head (luxury products & digital) – Kolte Patil Developers on what 2016 has in store for the industry. Excerpts:
How would you describe the current situation of the real estate market in India in 3-4 lines?
The real estate industry has been stressed over the last two years. The negative sentiment has been primarily because of the history of late project delivery and mainly due to the negative publicity received by the Industry. The home buyers have become more cautious in making the final commitment of purchasing a property. Sales might have dipped but there is a sharp increase in the number of enquiries generated by various marketing initiatives. There is a definite demand but people are waiting to find the right ‘deal’ to transact.
How do you see the real estate market changing in 2016? Do you see an improvement in buyer sentiment? What is your advice to them for buying homes in 2016?
We are optimistic that 2016 would begin on a positive note, given the way the winter session of the parliament is currently proceeding. The Real Estate regulatory bill, currently being discussed, addresses several issues faced by the buyers and has been created with their interest in mind.
Buyer sentiment is dependent on many factors but we are hopeful that it would have an upswing to the positive side given the recent developments in the real estate sector. For the people buying homes in 2016, I would advise them to invest in good brands with a track record of timely delivery and compliance to quality.
Interest rates have dropped a bit over the last six months. Have the funding woes for real estate developers started to ease? Are there any new funding avenues for builders today?
Funding has never been as big a challenge for real estate players as getting various sanctions from government bodies. In spite of the sluggish sales in the last year, real estate sector secured a seven-year high funding of close to $ 8 billion. In fact, in this financial year, private equity players had invested close to $2.8 billion in the real estate market till September. Top that with an estimated $4.5 billion of NCDs till November 2015.
What are your expectations from the Union Budget 2016? What will be the impact of GST and real estate regulatory bill, if cleared in 2016, on the real estate sector?
We are hopeful that 2016 will start on a positive note. Apart from the government showing intent to regulate the industry by making the entire process more transparent for the home buyer, even developers are beginning to align their offerings to the changing needs of the Indian home buyers.
The passing of the real estate regulatory bill would ensure that all the consumer pain points have been taken care of. Escrowing 70 per cent of the sales proceeds would ensure that there is no diversion of funds to other project launches or land buying.
The real estate regulatory bill has no bearing whatsoever on the regulatory bodies that grant us sanctions. The process for us remains unchanged and this may not reduce the time spent on getting all the approvals, which is one of the biggest challenges faced by the developers. In the long run, consolidation of the real estate industry in India might lead to numerous small players making way for a few top developers with proven track record.
Which are the top three micro markets in India today from an investment perspective on which you would bet your personal monies for medium to long term?
For medium and short-term investment purpose I would place my bet on Pune and Bangalore market. Pune has time and again proved to be a good residential micro-market and has comparatively lesser inventory overhang. Bangalore has been a favorite for PE funds mainly because of its IT industry. Bangalore has a growing real estate market. With incremental employment and improved infrastructure it is most likely to see sustainable growth.
For a long term investment perspective Hyderabad look promising. In Hyderabad, with the abundance of commercial properties and the support received by the IT-ITES industry, there will be demand for residential properties too. The new Telangana government looks determined to make Hyderabad a lucrative investment destination.