Mumbai, Delhi are leading realty market revival

Mumbai, Delhi are leading realty market revival
The Financial Express, October 26, 2009, Page 4

Mona Mehta

Following the real estate sector’s revival, Raheja Universal Private Ltd (RUPL) has outlined a vision for development of 35 million sq ft of realty projects, 23 million sq ft of pipelines and how it foresees spearheading pan-India presence. Ashish Raheja, managing director of Raheja Universal Private Ltd, spoke to Mona Mehta on the ‘realistic pricing’ challenges the company would want to overcome amidst expanding its realty presence to other cities

Could you give details of ongoing real estate projects in the commercial, residential and retail segment? What are your expansion plans in India?

The company is actively pursuing premium residential projects across its core region of operation – Mumbai — and has already sketched plans to launch many new projects across South and North Mumbai.

With strong brand equity and an indelible footprint in Mumbai, we have now embarked on an ambitious venture to replicate our signature in Navi Mumbai and other cities across India, some of them being Goa, Mangalore, Nagpur, Chandigarh and Pune.

The total saleable area of on-going and forthcoming projects is to the tune of 18 million sq ft approximately. This includes residential towers, signature residential towers, office towers, residential complexes, corporate parks and townships.

What is your take on the revival gaining ground in the Indian realty market?

During the second half of 2008, the onset of the economic slowdown led both buyers as well as developers to sit up and take stock of the real estate scenario. In the residential segment, end-users became apprehensive about taking up long-term loan obligations due to job market uncertainties. Moreover, they adopted a ‘wait and watch’ policy to take advantage of consistent price declines. On the supply side, developers became concerned about increasingly limited funding options and a substantial decline in aggregate demand.

Now, there are signs of revival in the real estate sector with the metros Mumbai and Delhi leading the way.

Demand in Mumbai has always been real and with some re-calibration of product and pricing by developers as well as positive steps like bank rate cuts and overall economic stability, buyers are flocking to quality developers as they realise that this might be the best time to buy. The recovery in the commercial and retail segment is a little slower than the residential one but surely reviving.

How many affordable housing projects is Raheja Universal planning to launch?

We believe that the affordability is a critical aspect. However, its relative nature has to be recognised. In Mumbai, as you move from the northern suburbs towards the island city, the value of what is an “affordable” increases drastically. Looking at the extreme shortage of options and land, even a Rs 2-crore apartment in South Mumbai can be termed affordable. Similarly, apartments in the range of Rs 40-50 lakh are affordable in suburbs like Andheri- Malad-Kandivali-Borivali area.

The same cannot be said for other tier-II cities where anything above Rs 10 to Rs 25 lakh may not be termed as affordable.

What are your views on the price correction in the Indian real estate market?

There has definitely been a price correction across certain geographies and asset classes due to the effect of the economic slowdown. This has been more drastic in locations or segments where there has been oversupply and speculation like in Retail and IT. Overall there has been up to 35% drop in prices which even after recovering by 15% is still down by 20%. Developers have accordingly re-calibrated their product to cater to the market.

Tell us about the new land and real estate deals Raheja Universal plans to enter into?

Apart from strategic deals in Mumbai Metropolitan Region, we also have plans for key cities outside Mumbai namely Goa, Mangalore, Chandigarh, Nagpur and Pune.

We are also keenly following the developments in the real estate markets across India to put into place an expansion plan that is well thought out and based on strong positive fundamentals.