Track2Realty Exclusive: Vidya Basarkod, President, Sales and Marketing, Jaypee Greens believes though the Indian economy has gone through turbulent phase of slowdown, demand for housing has kept the momentum for residential real estate. In an exclusive interview with Track2Realty she asserts though liquidity has been a concern for both the buyers as well as developers, there are more pressing issues hampering the growth of the sector, like delays in approvals, infrastructure bottlenecks and skilled manpower.
However, she believes the year ahead holds promise for the residential segment and lot of movement is expected in tier II and III cities. Of course, the future rests with the integrated townships which are the only viable option for holistic living, she maintains.
Track2Realty: How do you evaluate the residential market in 2012? Has it been disappointing?
Vidya Basarkod: The Indian economy went through a slowdown in the last one year. But still, the real estate sector has been able to generate sufficient cash flow because of the continuous demand in the property market. The larger cities such as Mumbai and Delhi-NCR recorded healthy absorption of residential units during 2012.
The developers are stretching their capabilities to the maximum in order to meet the growing market demand and to attract more potential investors. Several prominent Indian developers have emerged, and more and more international investors and developers are entering into the country and this will surely boost up the demand in this sector. Factors like increase in income levels, stability in the rate of property market and easy availability of credit, all add to the rise in the demand in this sector.
Track2Realty: Pressure seems to be building on both the demand and supply side of residential realty. What according to you would be the next game changer move?
Vidya Basarkod: The Indian real estate sector has witnessed a revolution, driven by the booming economy, favourable demographics and liberalised foreign direct investments regime. Major percentage of real estate development in India has been in the field of residential housing. The remaining percentage of development includes office, shopping malls, entertainment centres, institutions, hotels, multiplexes and hospitals. The shortage in the housing sector will continue to stimulate the growth in the residential market. With the strong population growth, rising incomes, decreasing household sizes, and increasing domestic and foreign investments, the demand for office, retail and residential property has fuelled up and the same is expected to continue in future as well.
Track2Realty: Construction approvals and liquidity issues have been a major concern in the year. Do you expect some positive gains in the year ahead?
Vidya Basarkod: The liquidity issues are just one of the reasons for the delays. For many developers, more pressing has been the issue of getting approvals on time to get on with the construction. The sector is currently faced with challenges including high land cost, delay in approvals, liquidity issues both at the level of buyersâ€™ as well as developersâ€™, lack of infrastructure as well as skilled manpower. But things are getting back on track especially due to some of the improvements in the processes and the system.
Track2Realty: Which segment of residential units (luxury, mid income or affordable) is expected to command the market in near future?
Vidya Basarkod: While the luxury residential market in India is scaling new heights as developers redefine luxury with the rise in the number of HNIs due to rapid pace of urbanisation, the influx of global lifestyle trends and fast-growing service industries which are propelling many middle-income group individuals into the HNIs bracket. But still, the mid and affordable housing segment will be the key driver for residential market.
Track2Realty: Developers in the residential projects are looking to tier-II and III cities for better returns. What is your take on this?
Vidya Basarkod: The congestion of the tier I and metro cities has resulted in the shifting of real estate to the tier II and tier III cities. The tier II and tier III cities are witnessing flocking up with investors because of the number of properties available at the desired prices. The government is also taking special measures to provide smaller cities with infrastructural facilities. These factors are eventually affecting the property prices in these areas.
There are various sectors like the pharmaceuticals, financial institutions, educational institutions, IT and ITeS sectors which are coming up in these areas and thus attracting more number of buyers. The rising property prices in these areas are portraying a promising future to the investors and driving them to invest for the long term returns. Therefore, tier II and tier III cities are also termed as the extension cities of the booming metros.
Track2Realty: How far is high interest rate a dampener for the residential market?
Vidya Basarkod: High interest rates, as a practical matter, discourage borrowing and spending by both, individuals and businesses. High interest rates help to tamp down inflationary pressures, but they also slow the pace of economic growth. But the real estate sector is one of the fastest growing sectors in India and this is one sector where demand is not expected to go down in a long run. Easier access to bank loans and higher earnings are some of the pivotal reasons behind the growing Indian real estate sector. Even with high interest rates, buyers and the potential investors are putting their money to get high returns on their investments.
Track2Realty: Concept of Integrated Township has great potential in the Indian context. Still it is not catching up as expected. What according to you is wrong with townships?
Vidya Basarkod: True that the integrated townships have great potential in the Indian context and the trend is soon catching up amongst buyers and investors. It is a new concept in a country like ours and people are yet to explore this new idea. Still, these townships are becoming the new destination for Indian consumers today.
A township does no good until its planning is efficient and space saving which also ensures privacy and outstanding levels of security. Jaypee Greens (the real estate division of Jaiprakash Associates Limited) make sure the same by using upgraded expertise to deliver exceptional products to its customers.
The market for such gated communitiesÂ is gaining in strength as more and more people are aspiring for a better lifestyle and they want the combined benefits of residences, play areas, international standard schools, state-of-the-art health care facilities, shopping complexes and entertainment areas, all in close proximity and in a clean, green and safe environment. These mini-cities will soon become one of the most popular areas to reside and invest in.
Track2Realty: Indian townships have by and large failed to replicate international model townships. How far it is the failure of the real estate developers and to what extent policy has been a road block?
Vidya Basarkod: The concept of integrated townships is very nascent in Indian context. However, understanding the inevitability of holistic living experience in todayâ€™s world, developers such as Jaypee Greens has come up with mixed use development with different residential, commercial, institutional and recreational facilities. Organizations like ours ensure the best of value additions to its gated-communities which includes the sports facilities, club-houses, medical facilities, institutional offerings etc to shape their land parcels into state-of-art city.
The concept is not a failure at all; it may be an idea slightly ahead of its time and is soon to become a trend amongst buyers. Policies need to be in the interest of customers and environment and to ultimately facilitate the commercially viable and environmentally sustainable developments.
Track2Realty: Do you feel PPP model can be a viable option for establishing townships with walk-to-work culture?
Vidya Basarkod: Public Private Partnership (PPP) model seems to be the viable option as it will not only improve the pace but also the quality of development. Expanding the private sector role allows the public agencies to tap private sectorâ€™s technical, management and financial resources in new ways to achieve certain objectives such as managing cost, schedule certainty, supplementing in-house staff, innovative technology applications, specialized expertise or access to private capital. The private partner can expand its business opportunities in return for assuming the new or expanded responsibilities and risks.
The townships are certainly gaining popularity amongst the buyers, for the fact that they offer all the required means, all at one place. These townships will surely become the latest trend in the Indian context. The PPP culture is definitely a feasible option for the same.
Track2Realty: Project launches have been few and far between in 2012. How do you plan the year ahead?
Vidya Basarkod: Real estate sector is able to build the trust in the minds of buyers and investors. With a complete understanding of the customers, Jaypee Greens has made a place in the heart of many home seekers. As a developer, we have not seen any decline in the number of product launches in the year 2012. We have successfully launched products for different customer segments at our various townships, in Noida, Greater Noida, Sports City and Agra.
With the successful second edition of Formula One at Buddh International Circuit, opening of Yamuna Expressway, and a series of product launches, we have retained the confidence which has resulted in positive trends in the property market. The same is expected to continue in the year ahead.