The Hindu Business Line : Taking stock of southern market

From the buoyancy in 2007 to the slump in 2008 and signs of an upswing now; from spiralling interest rates to rate cuts and efforts by the Reserve Bank of India to ease money flow and now back to a tight-fisted regime; from soaring prices and willing buyers splurging on luxurious residences to buyers exiting the real estate market and their cautious re-entry now, the real estate development has seen the pendulum swing back and forth.

There are lessons learnt that can be shared, measures that are needed to deal with the impact of the swing in fortunes and the steps to be taken to ensure the initial signs of upswing are sustained. That is what Estate South, the annual conference on the state of real estate in South India, seeks to do this year.

Organised by the Confederation of Indian Industry – Southern Region, this year’s edition Estate South, the fifth in the series, , will be held on November 13 and 14 in Chennai.

The mood among developers is one of relief but the sector is not yet out of the woods. Though there have been declines in the past the last one year has been the worst.

As one leading developer put it, his sales dropped from about 20 units a month to 2-3 after October 2008. But in the last two months he has been selling about 25 residential units. The key difference however is these units are at least 200-400 sq.ft smaller than the ones he sold previously.

Mr M. R. Jaishankar, the Managing Director, Brigade Enterprises Ltd, and chairman of the conference, says the two-day seminar will look at the “way ahead” in the South.

Key issues

As the industry comes out the “recessionary phase”, funds flow, keeping costs affordable for the buyers, , the Direct Taxes Code, and the shift to Goods and Services Tax will be some of the issues being addressed at the seminar, Mr Jaishankar said.

Some unique experiences of the last one year, particularly the issue of parties in a contract going back on their commitments after signing on the dotted line, will figure prominently in a session, “Who moved my lease.”

This is a serious concern for developers of commercial space as every section of customers, including large MNCs and local players, opted to renegotiate lease terms in a market that seemed to be in freefall.

Affordable housing is not just about cutting down on size of apartments but also about increasing efficiency. Speeding up delivery by faster construction technology and project approvals are a necessity. Local authorities can take up to one year to approve a project.

That delay can add significantly to delivery costs. But there are also examples to emulate — Pune, for instance, seems to have found a way to speed up approvals, the seminar will showcase such systems, he added.

Improved sentiments

All sections of real estate, includingarchitects, builders, developers, and financiers, will address the various issues.

The residential segment is definitely on an upswing in Chennai, Bangalore and Hyderabad, he says.

The commercial segment is seeing initial signs of recovery and the mood is improving, as reports show that the economic slide in the US has come to stop and IT companies are recruiting more and their demand for space is improving.

Mr Jaishankar believes that the coming year “will definitely be better” and Estate 2009 will look at how to sustain it.

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