The real-estate boom is far from over, but is maturing after a frenzied round of activity that has seen developers sprout, projects mushrooms and new areas turning hot.
Despite the slowdown or marginal correction in the secondary market in real estate, prices will rise, albeit at a slower pace, in the near to medium term, leading developers from across the country said at the HT Estates Conclave on Saturday.
As customers are increasingly exposed to world-class products through various sources of information, they are more demanding in terms of accessories and other amenities.
“For quality products, there is a willingness to pay premium,” said Sanjay Chandra, managing director of Unitech Ltd.
Despite the fact that the real estate sector is an engine of growth, growth in the sector is stifled by excessive regulation, said Niranjan Hiranandani, managing director of the Mumbai-based Hiranandani Group. “In the last 15 years of liberalisation, the government has relaxed norms in almost every sector, barring real estate,” he added.
Inaugurating the event, Jaipal Reddy, Union Minister of Urban Affairs said the sector was a big job spinner.
“As per government estimates, the sector needs an investment of Rs 3,50,000 crore over the next five years. Since the government is expected to spend Rs 1,00,000 crore, these investments will be met through the public-private partnership model,” he said.
The issue is not the demand, as there is demand for good and affordable houses everywhere, said Rohtas Goel, chairman and managing director of Omaxe Ltd. “Land, being one of the most critical components, will continue to influence the price, for which the government policy is also important,” he said.
India is a long-term story and the real estate sector is just at the cusp of a new age, and quality drive premiums and price appreciation, said Yash Gupta, joint managing director of Hines India, a wholly-owned subsidiary of Hines Inc, one of the world’s leading developers.
The rise in demand in even ‘B’ and ‘C’ towns is because people want better lifestyles, said Pranav Ansal, director, Ansal API. There are many old B-grade towns such as Jodhpur, which did not even have sewer lines until two years ago and private developers are driving the change, he said.
Given the demand trend, the sector is expected to grow by more than 30 per cent every year, said Anshuman Magazine, managing director of the Indian unit of leading real estate consulting firm CB Richard Ellis, who moderated the session.
Ashish Puravankara, director at south-based Puravankara Projects Ltd, said developers had made super-normal profits in the past three years because of their old land banks, while now they have to buy land at higher rates.
“Their profit margins are getting squeezed as they cannot afford to increase the price exponentially,” he said.
In other words, the real estate boom is for real, but current ups and downs mark a growing up phase.