Housing focus shifts away from speculation
The ongoing correction in the secondary market has driven out the short-term speculators from the real estate industry, says Sanjay Chandra, managing director of Unitech Ltd told HT. Excerpts:
In the last couple of years we have seen emergence of many players in the real estate sector. Do you think there is space for so many players?
Since 2004, the real estate sector has witnessed phenomenal growth due to a sharp decline in interest rates. As a result, many land owners turned developers and made money in the past couple of years. After they exhausted their existing parcels of land, and bought new plots, the entire financial matrix changed.
As the volume of transaction has come down, short-term speculators are out, and these developers are feeling the pinch. Since many of them do not have deep pockets, it would be difficult to hold on to projects for longer periods.
You said the volume has come down, does it mean there is a slowdown and a price correction is ahead?
The speculators, who were looking at super-normal profits by selling these products in the secondary market, are in a bind as prices in the secondary market have not increased. As a result, the secondary market is witnessing some correction in certain pockets.
Having said that, quality products and new launches in good locations continue to get good responses. Good projects also demand better premium and prices have increased, too.
Do you think that due to mushrooming of retail malls, many are facing severe problems in achieving break-even points?
Consolidation is inevitable at all levels. The Indian retail sector is in the growth phase. Even in the retail sector, projects with better ambience, facilities like car parking and large enough to provide sufficient options to consumers have much better chances.