The real estate sector is pinning its hope on a revival as the clamour for a rate cut is slowly and steadily growing louder. Industry watchers are also keenly waiting for the fine-print of the Real Estate Bill that was passed by Parliament and how regulatory changes happen in the States. The real estate sector is also burdened with a pile of inventory.

Speaking to Bloomberg TV India, Prestige Estate Chairman and Managing Director Irfan Razack says rate cuts can cheer and instil confidence in buyers to commit themselves to buy a home. The maximum demand for housing is coming from the bottom of the pyramid as also from the mid-income segments of the society, he said.

We are at a very crucial juncture where we could possibly see interest rates across the board coming down quite significantly from banks as well as the RBI. What are the hopes for the industry?

I think if the interest rates come down, it is going to give that much more cheer and confidence to buyers to commit themselves to buy a home. So it is a positive thing as far as the home buyers are concerned. I believe that will also enthuse and push sales further. Of course there are a lot of macroeconomic considerations that we have to look at. We have the new Real Estate Bill that has been passed by Parliament and we have to start getting compliant on that. States have to go with the legislation, and whatever changes they would like to bring in the current framework that has to be done. So I believe there is going to be challenging times and we will have to look at different ways in business.

Talking about the Real Estate Bill as well as the rate cut, hopefully for the industry it is going to be enough to cheer. The kind of inventory that the industry is sitting on, gives us a sense of how real estate firms are going to address the problem?

Actually, if you look at the market we operate in, we really do not have any ready inventory. The inventory that is being talked about and I think across the board and throughout the country, is the inventory that is under production. Any launch that happens today will take about 0-5 years to complete. When we have a launch today and add that as an inventory, is not the right way to go about. Of course, the stock is available at that time. But then the inventory is ready to be occupied with the keys available. We did a study in Bangalore through Jones Lang LaSalle (JLL), which showed only about 2.5 per cent of the entire launches that were available as a ready inventory to occupy where keys are available for a person ready to move in. And 2.5 per cent of the overall stock is really not too much in terms of the overall inventory. I think we are very safe from this and the good part about the Indian market is that there is a demand. There is a need for housing and occupancy levels are also pretty high. Also, now we have to address the segment where the need is. The bottom of the pyramid is where there is maximum need. If you get into the mid-income range, the need comes in there also. The top of the pyramid is where the luxury and the niche market are and I believe the number of launches over there in that segment is not too large. So, if you are able to balance out the requirement and demands from the lead segments of the market and if you are able to read it right I do not think there can be any stress in the system.

Analysts believe that over the next 2 years, new projects coming into the market will start dipping. Do you agree with this?

That is a function of how soon the approvals come in and how soon the new products come in the market as an offering. For us, Bangalore has been pretty good. We have been able to get the approvals. But similarly we have not been able to launch 2-3 large projects in Chennai. Once the Real Estate Regulatory Bill becomes law, the market will get slow by 6-9 months because you need to understand the overall situation.

Related Topics
comment COMMENT NOW