Indian Property Down, But Not Out

Refusing to be out of the limelight, the real estate sector is hitting the headlines all over again. A couple of years ago, real estate was the talk of the town when the property market was booming and seemed to be the best bet for investors. These days too, the sector’s development is making headlines, albeit for wrong reasons. Realty news today is marred with negativities such as liquidity crisis and project delays and property transactions have come to a virtual standstill. Any talk of investment in real estate is frowned upon. If the earlier optimism was a case of irrational exuberance, the pessimism of recent days too is uncalled for.

“It is true that the sector is going through a rough patch, but so are other sectors in the country. Yes, intense speculation had artificially jacked up property prices but speculators have either bowed out or are on their way out,” says property agent, the sector may be down, but certainly not out. The future increase for the sector will come from the segments, which cater to the masses and are affordable, he adds.

Even in times of a slowdown, Kolkata-based Bengal Shristi Infrastructure Development is spending more than Rs 2,000 crore towards the development of more than 90,00,000 sq ft at Asansol, Haldia, Ranigunj and Krishnanagar. “We are and we will be investing where there are end-users. Our investment will be fuelled by actual demand so we are not much worried about returns on investment. They will come in due course,” says Hemant Kanoria, director, Bengal Shristi. He adds that the company plans to sell properties in these areas at 20 per cent premium over local development.

Kumar Sankar Bagchi, managing director, Bengal Peerless Housing Development Company, agrees. “Yes, the future lies in affordable housing. We have already started moving to far-off suburbs and smaller towns such as Shantiniketan and Seuri in West Bengal. Many people in those places are sitting on idle funds because they did not have too many spending options. But they now have aspirations and, therefore, there is a demand for comfortable housing from people who actually propose to stay in those houses,” he says.

In fact, even big developers such as DLF, Unitech, Parsvnath and Omaxe have realised that future growth would lie only in those verticals which come within the budget of a large majority. “Our focus in 2009 will be to build houses that are affordable to a large majority,” says Sanjay Chandra, managing director, Unitech.

A large number of end-users take home loans to buy a house, says Rohtas Goel, chairman Omaxe. “Our focus will be to build houses wherein the EMI (equated monthly installment) for home loan comes under one's monthly budget,” he says.

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