Sushanto Roy,head- infrastructure and housing- Sahara Prime City,describes that every market has its own local factors,peculiarities but the steps to improve sentiments may differ. He says that the government has taken some policy measures but the real impact may still take some time to be felt in terms of demand. Excerpts from a conversation with Praveen K Singh: •As a developer,what solutions you propose to revive the industry against the downturn effect? The prevailing situation demands a concerted effort on part of the government,developers and financial institutions. The boom which was witnessed not long time back was primary due to demand driven by the investors and expansion plans without taking in to consideration real demand assessment,capacities,competencies and high funding costs. Cities where the real end user demand exists are tier II and tier III cities. Strategic shifts based upon real demand assessment,focus segments and more balanced concentration towards affordable housing segment,instead of luxury segment,will help in rationalisation,the process of which has already started. Volume based business approach instead of margins will be the rational approach in todays scenario. Every Market has its own local factors,peculiarities but the steps to improve sentiments may differ. Government has taken some policy measures but the real impact may still take some time to be felt in terms of demand. Financial institutions on their part can help ease matters by restart funding to both developers as well as retail consumers by infusing liquidity in the system instead of following an over cautious approach. Formulation of regulatory mechanism in the real estate industry is an urgent necessity. Institutionalisation in financial structuring of real estate investment is long overdue. •Have there been ample corrections in the market? Generally speaking every city is driven by specific dynamics and accordingly has been impacted in varying degrees as a result of the recent happenings. Some cities particularly tier I and investor driven tier II cities have seen price corrections to a greater extent than rest of the cities. Despite the corrections and the measures taken by the government,the sector has not kicked off aggressively because of the wait and watch approach being followed by the consumers in terms of anticipation of further price corrections and uncertainties prevailing because of recent economic meltdown. The realty companies have to review their financial position so as to decide what to do with the ready stock. It has to be seen on a case to case basis. •With banks bringing down the interest rates as low as 8 per cent,do you think that this will further boost the market? Some of the banks like State Bank of India have taken lead and they have already launched special scheme wherein housing loan would be provided at 8 per cent for the first year. Other banks are likely to follow suit in order to remain competitive and also governments eagerness to bring the rates down. With inflation rate also coming down,we can hope for lower interest regime. This is positive for the sector and will boost up Market. •When do you think things will settle down? Real Estate sector has largely been impacted by the economic downturn brought about by domestic and global factors. Although,it is difficult to foresee when things are going to turn around,but considering the importance of real estate sector in the overall economy and the need and governments interest to improve sentiments and fuel demand,realistic strategic shifts, the sector may start looking up in the next few months. •What are the challenging issues the industry is confronting and what should be governments role to smoothen the process? Negative sentiments are critical issues which need to be smothered. Real demand assessment,review of ones resources,ability to raise funds,bring about liquidity in the system - both for the developers and retail customers,realignment of markets like tier II and tier III cities,focus areas and segments based upon real demand and rationalization of taxes are some of the critical areas which needs to be looked upon. Government has to play a role of the facilitator for the industry since growth of economy is dependent upon it. It has to create an overall favorable environment and needs to address effectively macro issues necessary for growth of the Real Estate industry like rationalization of taxes,easing up of interest rates,measures for liquidity,mechanism for institutional finance structuring,and regulatory mechanisms need to be addressed.
