Ushering a phase of professionalism in realty sector wherein the realtor evaluates the property through their own developed systems of checks and balances giving their clients the best possible deals,Dr. Devinder Gupta,CMD,Century 21 India believes that as far as the small developers are concerned they are facing severe crises of liquidity and are on verge of default,because of this problem they are not able to deliver the projects in time. He says that the developers are also restructuring their existing finance by pledging of securities and are trying their best to dispose off their properties in order to raise their liquidity. Excerpts from a conversation with Praveen K Singh: •How do you see the downturn in the realty sector when the global meltdown is eroding the market capitalisation of realty companies and investors even dumping their stocks? In our country the erosion of capital has been relatively less compared to international scenario. On the other hand,the incremental increase of per capita income which is as per the Central Statistical Organisation (CSO) has been more than the incremental growth in realty sector. Theoretically it should go parallel. In other words,the downfall is too deep to justify it,but it will again catch up with incremental growth in per capita income,as soon as sentiment and demand revive in the market. •In order to boost the sector,even the banking sectors have reduced the interest rates,going as low as 8 per cent. How do you think this will boost the sector and how developers should utilise it to the maximum? Even though the rate of interest is reduced to 8 percent,still there are lots of factors that need to be corrected before it is transmitted and realised at the ground level. Risk perception of banks as well as the saving rates of deposits,savings on Government guaranteed deposits (GPF,EPF,Post office) are not reduced in proportion to the reduction in lending rates,no real impact will be seen. Besides uncertainty in the labour market,lay offs in corporate sector and absence of disposable income of individuals will decide the future demand in the realty sector. At present the demand is almost negligible. Among the three segments of the society,lower income group,middle income group and higher income group,the major constituent of buyer is middle income group,who are interest sensitive,unless and until government take comprehensive simulative package for this sector,the demand will not rise. •How developers are restructuring their debts? Do you think they should opt for private equity investments? Alike any corporate,the real estate companies,in order to beat the downslide,are laying off employees and are up on cost cutting. Most of them are holding their extension plans. In order to enhance sales of their unsold flats,they are offering discounts and incentive to buyers. The developers are also restructuring their existing finance by pledging of securities and are trying their best to dispose off their properties in order to raise their liquidity. On the investment level,I don't see much of the developers opting for private equity. In my opinion,the investors should wait till there is some certainty in the market. •With a promise to deliver projects in a stipulated time,several developers made the booking of flats and then failed to hand over the flats in time. What's your comment on this? The market is broadly composed of two types of developers: small developers and big developers. As far as the small developers are concerned they are facing severe crises of liquidity and are on verge of default,because of this problem they are not able to deliver the projects in time. To add to the problems further,their consumers are also defaulting on payments in time. On the other hand,where big developers are concerned,they are not coming with new projects and are only focusing on existing projects as a result of this the prospective buyer is holding on to his decision. •How your company is playing its role in boosting growth in the realty sector? The aim of Century 21 in India is to usher a phase of professionalism in realty sector in India wherein the realtor evaluates the property through their own developed systems of checks and balances giving their clients the best possible deals. This concept is widely prevalent in Western countries where professional realtors play a pivotal role in selling of the properties to the entire satisfaction of the customer thus establishing an extremely meaningful role for themselves. •What according to you are the critical issues in front of the industry? The most relevant issue in front of the sector is to revive the market. The government needs to intervene and provide tax holiday to developers. The land price has to be controlled and there should be provision for single window clearance. Also,there is a need to reinstate a regulatory body to bring transperancy in the market.
