While there are reports of price correction in Mumbai realty, R Karthik, Chief Marketing Officer of Mumbai based realty firm Lodha Developers believes there will be a positive trend in the year 2011 and the demand will be led by the real buyers. He asserts that one of the facts missed out by most studies is the fact that new launches of real-estate products often act as pressure-relief valves on the overall pricing situation – by ensuring large scale consumption of demand at relatively lower prices, and most of the price increase being spread over a smaller base of under-construction inventory over a period of time. Excerpts of the interview with Ravi Sinha.
Q How do you see Mumbai realty market shaping up in the year 2011?
The year 2010 has been a great year for both the developers and the customers, with large transaction volumes for the developer and a slew of new projects providing customers with significant choice and we believe that the trend will continue. With the overall improvement in the economy, greater focus was on the luxury and premium segments. Last but not least, the commercial segment has also shown a positive trend with new innovative launches by developers. Overall Real estate business has moved with the economic growth and we expect the positive trend in sales to continue in 2011 and this demand will be lead by real buyers i.e. customers purchasing property for own consumption and not for investment. In all segments, there will be renewed focus on the product and the brand, and only differentiated & superior products will get the customer franchise.
Q JLLM, Fitch and Cushman & Wakefield predict price correction in the year. What is your take on that?
We expect that there will be reasonable stability with increase in prices commensurate with overall inflation and do not foresee any fall in prices. The various reports look at real estate at a commodity level and not as branded consumption oriented products. Also, with overall macro-economic showing a very positive trend, the prices would stay robust. Also one of the facts missed out by most studies is the fact that new launches of real-estate products often act as pressure-relief valves on the overall pricing situation – by ensuring large scale consumption of demand at relatively lower prices, and most of the price increase being spread over a smaller base of under-construction inventory over a period of time.
Q Do you think there are pockets that will see correction, or there will be a general slowdown in the city and outskirts?
I see neither of this happening.
Q Do you agree with the view that Mumbai realty market is slated for oversupply this year and the fierce competition will turn the market into buyers market?
This seems unlikely as Mumbai’s population exceeds 22 million and being an island city, land is limited. The 2007 report by Mackenzie based on the census data, says that Mumbai needs a little over 2 lakh homes every year. Government policies should also encourage development of townships in peripheral areas to Mumbai as well as concerted efforts to develop planned infrastructure ensuring speedy connectivity to Mumbai city.
Q Any launches that you have planned for this year?
We have a slew of new launches planned this year, the immediate in the current month being a commercial project at Thane and a residential project at Powai. We have also recently launched Lodha Aurum Grande at Kanjurmarg.
Q Any corrective measures that you have planned/you will think of in the case of market correction?
As mentioned, we do not expect any price corrections
Q Any learning curve coming out of the market crash in the last 2-3 years?
Lodha has been responsive to changing market situations and had dynamically realigned its project portfolio anticipating demand-supply mismatches in the market. Having identified the untapped. Potential in ‘affordable segment’, the group created an entirely new residential category – Mid-Income Luxury. A new sub-brand ‘CASA by Lodha’ was created for this category, with essential quality and luxury endorsement, providing ‘right sized’ and ‘right priced’ products in Mumbai’s sub-urban locations. Today, over 11,000 happy families in Mumbai are part of the Casa world – a testimony of the success of the brand.
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