Real estate can never lose its sheen as the most attractive investment option and it is only a matter of time before the growth trajectory is back on track. The chairman and managing director of Prestige Constructions,Irfan Razack believes that if a developer has a property in the right location with the right pricing,then he has nothing to worry about. With a turnover of over Rs 1000 crores and having completed more than 184 projects covering 20 million sq ft,the group currently has 13 million sq ft under development.
In an interview to Praveen K Singh,he says that that real estate is the only commodity that continues to be safe to invest in,unlike shares or stocks. Excerpts:
As the global meltdown erodes the market capitalisation by over 80 per cent in 2008 with investors even dumping real estate stocks,how you look back at the past year?
Last year has been buoyant. However,its last quarter witnessed the financial slowdown & global meltdown starting with the Lehman Brothers. Peoples sentiments changed along with the interest rates in the housing sector due to these developments.
The final quarter of 2008 has seen several speculators being filtered out and creation of a genuine demand for property. I consider this a positive trend which shall continue to galvanise growth in a gloomy environment.
This has definitely led to a shake-out in the industry and bringing the scanner on several critical qualities such as quality,design,reputation,pricing,amenities,after-sales service and so on to the fore. Property developers will have to now work harder to win the loyalty and trust of their customers.
In most places,builders are holding on,they are abstaining from selling rather than reducing prices. Whats your prediction for the year 2009?
After a long and profitable bull run,the real estate sector is finally showing signs of a slow down. I think diversification and focus on core deliverables based on a bedrock of quality and transparency will be the mantra for growth.
Genuine property buyers will now be in a position to take decisions in a less cluttered market place.
It is widely estimated that the country still has a wide housing shortage of several million units. The good sign is that the speculators are disappearing and genuine buyers are increasing.
The Prestige group does not plan to have any launches in the first two quarters and the focus will be simply on delivery and our customer only. I expect this year to be more cautious and stable,but likely to pick up only in or after the second quarter.
While buyers are waiting in anticipation for the prices to fall,the investors are expecting higher returns to cater to the high risk factors. When do you think things will settle down?
In my opinion,Indias is a robust economy and can bounce back to normalcy in record time. Behavioral patterns of customers and sellers are bound to change during the times of recession. Also,the mantra of wait and watch would rule rather than being impulsive. However,as indicated,I believe that this trend has helped filter out the speculators,thereby catalysing a genuine demand for property.
If a developer has a property in the right location with the right pricing,then he has nothing to worry about.
I also believe that real estate is the only commodity that continues to be safe to invest in,unlike shares or stocks. This is evident when one compares any property that was bought about ten years ago vis a vis its current value. Hence real estate can never lose its sheen as the most attractive investment option and it is only a matter of time before the growth trajectory is back on track.
Do you see a shift in focus to mid range with a considerable correction in prices of existing residential projects?
According to a recent report,the real estate market in Bangalore in 2009 has shaped up as the Year of Affordable Housing. About 41 per cent of the demand for residential properties in the city is for those in the sub-Rs 40 lakh category,while it is 26 per cent for those in the Rs 40-75 lakh range,according to a three-month survey by a real estate portal.
The report says that there is an oversupply of properties above Rs One crore,and the supply is more than twice the demand for properties costing above Rs Two crore. The strategy over the next few years for developers should be to marry their project specifications with the actual demand to create sustainable businesses.
How is Prestige Constructions going to re-write the future of Real Estate industry in India?
The Prestige Group has always been known for its unique initiatives. We have given new landmarks to Bangalore; like its first mall,the Forum Mall and the UB City,one of the tallest and finest structures in the city also a Luxury Destination,The Collection at UB City.
We are all set to make its presence felt in several other cities across South India. With a turnover of over Rs 1000 crores and having completed more than 184 projects covering 20 million sq ft,the group currently has 13 million sq ft under development. Aggressive growth plans in the residential,commercial,retail,and hospitality domains will be seen dotting the skylines of Bangalore,Goa,Hyderabad,Mangalore,Cochin and Chennai in the coming years. This would give each city an unparalleled experience with landmark malls on the lines of The Forum,large townships,tech parks,hotels,luxury villas,and SEZs.
Egged on by the runaway success of The Forum Mall,the Group has plans of taking the Forum brand forward to several cities in South India. Seven more Forum malls are in the pipeline across Bangalore,Chennai,Hyderabad,Mysore,Mangalore and Kochi. The most-awaited project is the Forum Value Mall coming up in Whitefield.