The real estate sector is in a slowdown. BE’s Saptarshi Deb spoke to Harshavardhan Neotia, Chairman, Ambuja Neotia Group, about the prospects of revival.
Q) Given that the inventory pile-up in the Indian real estate market is among the highest ever recorded, do you foresee signs of revival?
A) It’s true that the huge inventory pile-up in the Indian real estate market is compounding the problems of the real estate sector already reeling from a severe cash crunch aggravated by the distress in the non-banking financial company (NBFC) sector. Consequently, the real estate market is in the midst of a churn. However, the housing market is slowly showing signs of recovery. We need to come up with relevant projects - with realistic pricing and sizing. What has been attributed to the recovery in housing sector is primarily the increased activity in the mid-end and affordable segments. The stabilisation of key policy reforms such as implementation of GST and RERA also helped in improving consumer confidence.
Q) The affordable housing segment finds a mention in Budget 2019. Will government's newly added provisions push up sale in this segment? Can registration fees be reduced here to encourage buyers?
A) In terms of taxes, the government has increased the tax deduction benefit against interest on home loans for affordable housing, with a value of up to Rs. 45 lakhs. Interest deduction up to Rs. 3.5 lakhs for affordable housing, as against Rs. 2 lakhs earlier, is available for loans taken till March 31, 2020. This is expected to drive sales and bring fence-sitters into the market. However, we need to bear in mind that the introduction of the Goods and Services Tax (GST) has not subsumed the stamp duty and registration fees, which are state subjects.
Q) How is the luxury segment performing in the current fiscal? Is there a tail wind for the demand of commercial spaces in this fiscal?
A) The luxury residential segment has been the most adversely impacted segment due to various regulatory developments as well as market dynamics. The weakness apparently in the luxury residential real estate is likely to continue in FY20 on the back of liquidity pressure faced by developers and weak consumer demand. However, of late, stagnant prices and best-buy deals have brought back some of the demand for luxury homes.
Q) According to an international study, millennials can provide a strong push to the global real estate sector in near future. Can India's young population dividend translate into strong demands for the real estate market?
A) It seems so because estimates peg that India will have 410 million millennials, who will spend $330 billion annually by 2020. Also, the preferences and the needs of millennial buyers like residential projects with basic amenities, urban connectivity, and public infrastructure in a liberal neighbourhood, are likely to have a healthy traction in the real estate market in the upcoming years.
Q) Can any specific policy intervention be used to ease the real estate market? Can granting industry status to the real estate market be of any help?
A) So far as policy intervention is concerned, I think imparting industry status to the sector will enable developers to cut capital costs and pass on the benefits to consumers. Besides, a single-window clearance has also been a long pending demand from the sector.
Q) What are your ongoing projects and how has been your experience?
A) India is currently in the midst of fairly challenging times. However, like any other business person or professional, I too face challenges but I firmly believe that there is opportunity within every adversity. The group has launched Utalika - The Condoville, an 1100 plus apartment complex offering varied amenities in Mukundapur, off EM Bypass, Kolkata. Uttsav Park, Dhulagarh is a plotted development project spread over 43 acres which offers a wide range of plots. With successful foray in retail infrastructure with City Centre malls, the group presently has a project in Patna (Bihar). In the hospitality sector, upcoming projects include several luxury boutique resorts that include Chia Kutir, Makaibari Tea Estate, Kurseong and Guras Kutir, Pangthang, Sikkim.
In the healthcare sector, the group has come up with its second hospital in New Town, Kolkata, keeping in mind the growing demand for super specialised healthcare for women and children. Bhagirathi Neotia Woman & Child Care Centre (BNWCCC) New Town is a 125-bed super specialty hospital next to Biswa Bangla Convention Centre, offering highly advanced facilities for women and children.