Smaller towns to catch up, but will take two years
As India’s economy sustains growth close to 9 per cent, real estate will continue to play a bigger role in creating demand for other sectors such as cement, steel, and consumer durables as well as supply, said Rohtas Goel, chairman and managing director of Omaxe Ltd. As land becomes scarce in big cities, growth will be driven by suburbs and ‘B’ and ‘C’ grade cities, he told Arun Kumar in an interview. Excerpts:
In the last couple of months, real estate prices are witnessing a 10 to 15 per cent correction. Do you think that now the trend will be upward?
As far as end-user demand is concerned, it is still strong but due to a rise in the interest rates, the affordability issues have become more vital. The price correction, particularly in the secondary market, was triggered by the rising interest rate. Going forward, as the interest rate has started softening, the prices will start firming up. Our experience shows that new launches continue to get good response.
You said that demand is from across the country. Could you elaborate?
Land is the most critical part of real estate including residential, commercial or retail. Despite all the perception of price correction, the fact remains that the land prices continue to rise. Given the high price in metros, suburbs in the short term will continue to drive the growth as houses are more affordable there.
Secondly, the quality of infrastructure and employment opportunities in the suburbs are much better than some of the smaller towns. Smaller towns will also catch the growth but it will take a couple of years.