Propelled initially by government stimulus packages and then by genuine demand from end-users in a recovering economy, real estate developers seem to be back in business. Some are tweaking up prices while others are tapping the capital market to grow. Anshuman Magazine, chairman and managing director, South Asia, at property consulting firm CB Richard Ellis, spoke to Hindustan Times about the state of the industry. Excerpts.
On the outlook for 2010, and Mumbai/Delhi markets
The year started on a discouraging note. However, from the third quarter onwards a reduction in prices, a softening of interest rates and an improvement in the economic sentiments led buyers coming back to the market. Both cities saw an increasing focus on affordable housing for the middle- income group, which resulted in the launch of several projects in the peripheries of Mumbai. In Delhi, developers re-modeled a number of projects to fit into the affordable housing segment.
There is a definite improvement in the activity level of the residential market. I expect this to sustain in 2010, especially in the affordable market segment.
On developers jacking up prices
The prices of certain projects have inched up. However, it is important to note that this is from an already discounted price and therefore from a lower price base. Secondly, the price movement depends on the demand and supply situation in the various micro-markets as well as the success of particular projects due to location, the developer, quality and price.
On commercial properties in Mumbai and Delhi
The last two to three months of 2009 has witnessed some improvement in the commercial and retail real estate in both cities. In the office market segment corporates are slowly returning to the market and office space take-up has improved. Besides the IT and IT-related companies, telecom and FMCG (fast moving consumer goods) companies have also contributed to the demand. However, 2009 has seen a huge amount of new office space supply coming into the market which will keep rentals at competitive levels in the medium term. With an improvement in the consumer sentiment, and competitive retail rentals, retail real estate too is ambling towards better activity levels.
On commercial properties in Mumbai and Delhi
The last two to three months of 2009 has witnessed some improvement in the commercial and retail real estate in both cities. In the office market segment corporates are slowly returning to the market and office space take-up has improved. Besides the IT and IT-related companies, telecom and FMCG (fast moving consumer goods) companies have also contributed to the demand. However, 2009 has seen a huge amount of new office space supply coming into the market which will keep rentals at competitive levels in the medium term. With an improvement in the consumer sentiment, and competitive retail rentals, retail real estate too is ambling towards better activity levels.
On IPOs by realty companies
Some of the firms coming out with IPOs (initial public offers) do offer interesting options to invest. However, investors should look at the track record of the firms which are going in for these IPO’s, the real estate holdings and development plans they invest. It is still early days to presume that we are heading towards another bubble.