Harshavardhan Neotia is the Chairman of the Ambuja Neotia Group that operates through several companies covering the entire spectrum of the real estate industry including housing, hospitality, healthcare, and education. The group is one of the leading players in the real estate sector in India. BE’s Saptarshi Deb spoke to Harshavardhan Neotia regarding the emerging trends in the real estate sector.
Q) Your entry into the real estate market was marked by a focus on affordable housing. However, many of your recent projects are focused on a niche luxury segment. What are the reasons behind this shift?
A) The Ambuja Neotia Group has been into both affordable housing as also HIG (high income group). While many of our projects comprise LIG (low income group), MIG (middle income group), there have been a few high end projects with premium facilities and support services. The factors that influence the type of projects are quantum of land, the position of the land, the cost of land, and market demand.
Q) How is the GST impacting the real estate sector? Are real estate players in a position to pass on the benefits of the GST to the consumers?
A) The real estate sector stands to benefit from the GST as it would provide more clarity on tax-credits for transactions. The GST will have a major impact on how the developers run their businesses. Developers have realised it is time to revamp their existing business models if they want to remain in business. Real estate firms are gearing up to pass on the tax benefits to homebuyers under the GST regime. However, prices of the ready-to-move-in apartments with completion certificates would remain steady as these properties are out of the GST ambit. Any price change in the segment will depend purely on demand and supply.
Q) What has been the impact of the Real Estate (Regulation and Development) Act on the sector in the states where it has been implemented? How has it affected real estate players (large-, medium- and small-scale) and the consumers?
A) The RERA is likely to revive the real estate sector by bringing in two key components, namely, accountability and transparency. The Act is also expected to revive the confidence of key stakeholders in the real estate sector leading to structural shift towards a healthy business environment. There will be challenges initially. The pain of transition will be there. But in the long term, it augurs well for the sector. It will do a lot to increase consumer confidence.
Q) What are the emerging trends on luxury housing in India?
A) True luxury means different things to different people, but for most consumers the term connotes rarity, quality, and refinement. A few years back, luxury was the entitlement of the rich. Today luxury is mass – aspirational, simply because luxury and excellence have, over time, become synonymous.
Looking at the changing face of luxury from the real estate perspective, I guess the following trends have changed over the time and redefined luxury. Traditionally, prominent addresses and prized ZIP codes are no longer the defining baseline concept for luxury homes. HNWIs (high net worth individuals) are expanding the borders of traditional luxury locales and are willing to pay a premium in emerging luxury areas if the amenities and lifestyle offerings are right. The demand for more sustainable and healthy environments has not only placed greater emphasis on but has also fuelled a trend toward conscious living. Buyers are increasingly seeking to spend money on property features that could be described as ‘experiential’. The growing trend is a preference for homes that have access to amenities that enrich family life and lifestyle options that can be experienced every day, like meditation gardens or outdoor spas.
I must also add that there is a conscious shift in the definition of luxury from the 1960s and 1970s to 2017 with ostentatiousness being abandoned in favour of the subdued, understated, and out-of-public eye homes. Privacy, discretion, and exclusivity have become the key criteria of defining luxury to new-age buyers.
Q) As a leading player in the real estate sector, how will you evaluate the market in West Bengal? What are the central problems of the sector? What policy initiatives can enhance the market?
A) Real estate in the city has witnessed some challenging times during the past two to three years. With the real estate price in the main city area escalating, fresh developments are taking place along the city’s periphery. The real estate developers of Kolkata have shed their inhibitions of getting into low cost homes and are open now to invest in lands, which are even beyond the formal boundary of Kolkata.
With all major players launching new projects in Kolkata and its fringes, the supply has been aplenty. Builders are coming up with special offers like down payment scheme and easy finance options to lure buyers to invest in the segment. An effective resolution of the impasse surrounding the Land Acquisition Bill will be crucial for long term stability of the sector. Land acquisition has often been a major challenge for businesses as well as for the authorities in India. Difficulty in purchasing land has stalled projects and in some cases resulted in project cancellations.
Q) What sort of business viability is there in the mass housing sector for private players?
A) Analysts expect affordable housing project launches to continue to grow further driven by demand, lesser time required for construction compared with mid-to-high end housing, and government incentives for such units. While affordably priced housing is a low-margin business, it promises high sales volumes for real estate companies. Real estate firms backed by corporate groups realised that low-priced housing is a large segment, which no one has catered to and it is a business, which is recession-proof and has high customer demand.