Shristi Infrastructure Development Corp. Ltd. is a real estate player that is focused on non-metro cities. Abhishek Bhardwaj, CMO, Shristi Infrastructure Development Corp. Ltd., spoke to BE regarding his expectations from the real estate market.
Q.What is the present scenario of the real estate sector in India?
A. After agriculture, real estate is the second largest employer in India and is slated to grow at about 30% over the next decade. The real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. Affordable housing in India is getting the much desired infrastructure position. More than one crore houses are to be built in rural India by 2019. This vital segment will now see cheaper sources of finance including external commercial borrowings.
Q. How do you foresee the near future for the real estate sector in the country?
A. In the next few years, the real estate investment industry will find itself at the centre of rapid economic and social change. While most of these trends are already evident, there’s a natural tendency to underestimate their implications over the next six years and beyond. By 2020, real estate managers will have a broader range of opportunities and new value drivers. As real estate is a business with long development cycles, now is the time to plan for these changes.
Q. How is the FDI inflow in the sector? How far that will help to boost the sector?
A. India is ranked fourth in developing in Asia for FDI inflows as per the World Investment Report 2016. Though the historic high of 2007 (in terms of total PE inflows) could not be superseded, last year proved to be the second-best year. Despite various global uncertainties, PE funding looks healthy in 2017.
India’s tier-I cities have seen improvement in their transparency rankings (JLL Global transparency report of 2017) and have been catalysts in improvements related to structural reforms. Increased transparency has helped in bringing higher investments into real estate markets. Thanks to changes in its regulatory framework, India is now more attractive to both global and Indian investors. Increased consolidation and transparency and the launch of REITs (Real Estate Investment Trusts) this year will further stimulate the appetites of foreign players for getting a piece of the Indian real estate pie.
Q. What impact is expected by the enactment of RERA on transparency and accountability for developers and for confidence building of the consumers? Will it help boosting the sector?
A. The real implications of RERA can only be gauged over a period of 2-3 years, but it will bring in significant changes in the sector. RERA, along with demonetisation and GST, will make sure that the market is largely driven by end-users. To understand the real impact of RERA, we must analyse its impact on its two key stakeholders - builders and buyers. While RERA benefits the builders by bringing in more transparency and accountability, which will stand them in good stead by ensuring the flow of institutional funds, the real winner will be the end-users who will be protected from unscrupulous activities. The immediate impact will be on consolidation, how capital is raised and deployed, and increasing compliance costs for developers. But if we look at the larger perspective, the net gainers will be the organised developers, who will pass on the benefits gained from RERA to the consumers. RERA has already led to many developers hastening the delivery of their projects. It is encouraging to see that some states like Maharashtra have not only notified RERA but have also set up a regulator.
Q. How far is the idea of “the sun rises on affordable housing” possible?
A. The Union Budget 2017 has set a direction for affordable housing in rural and urban areas and gave it a boost to make real estate more lucrative. The government’s support to the housing sector in this budget is to drive forward its vision and mission of “Housing for all by 2022.” With the announcement of 1 crore houses to be built by 2019 in rural India, the Union Finance Minister has stirred up the real estate sector by increasing the allocation for Pradhan Mantri Awaas Yojana (PMAY) for rural areas. These measures announced by the government for rural upliftment, will get at least the affordable housing market in the sector going. Households earning up to `2 lakh per annum and situated below the poverty line accounts for almost half of the total demand for housing between 2017 and 2020. The affordable housing market could be the channel for opening up other segments in real estate and now it is up to the developers to build confidence so that demand comes back.
Q. Please give an overall picture about your recent projects? Do you have plans for venturing into affordable housing projects?
A. We are focused on building in the real India which lives in tier II and tier III towns. Accordingly, most of our projects are located in non-metros. We function in all real estate verticals like townships, residential segments (Luxury and HIG housing / MIG Housing / Plots / Villas), warehouses, logistics and industrial parks, education, retail and commercial and healthcare. We will also be launching affordable housing projects in towns like Asansol, Guwahati and Krishnanagar. The real estate sector will be end user driven by customers wanting premium living and facilities at affordable prices. The home finance schemes and government subsidies will also be focused on end users which is why it is imperative that we plan our projects around this emerging new India.