‘There is a widespread feeling that the worst is over’

Some of the real-estate experts feel that the demand has not evaporated,it’s waiting to come to the surface but at the right price,right sentiment and with some kind of a guarantee that the product will come up in the market.

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Express Estates conducts a debate on the dilemma a buyer may face today: To buy or not to buy?

Very much affirmative is PRADEEP JAIN,chairman of Parsvnath Developers Limited and president of Confederation of Real Estate Developers Associations of India. Listed on the BSE,his company has a presence in 50 cities and 17 states across the country. One of the most diversified and widespread real-estate developers in India,Parsvnath has over 114 ongoing projects spread over a developable area of over 211.32 million square feet across all real estate verticals including commercial complexes,hospitality and SEZs spread all over the country.

Contradicting him is ANUJ PURI,chairman and country head of Jones Lang LaSalle Meghraj,a global real-estate services firm specialising in commercial property management,leasing and investment. One of the largest realty services company in India,with an extensive geographic footprint across ten cities (Delhi,Mumbai,Bangalore,Pune,Chennai,Hyderabad,Kolkata,Kochi,Chandigarh and Coimbatore),it has a staff strength of over 3800.

Pradeep Jain

Chairman of Parsvnath Developers Limited and President Of Credai NCR

The real estate sector,subsequent to the subprime crisis in the US and its cascading impact on India had witnessed a steep downturn in demand. The primary reasons being,the overall negative sentiment coupled with tight liquidity position of buyers. The buyers thus postponed their purchase,anticipating the prices to go downwards. This created an artificial demand-supply mismatch for the real estate products on offer. The situation was an alarming one,as the slowdown in the real estate sector led to a slowdown in more than 240 ancillary industries that it supports. It was thus hampering the over all economic growth of the nation.

In order to revive the real estate sector in general and the economy in particular there was a need for the Government,banks and the real estate developers to act in coordination. Thus,to provide assistance to the economy,the government is infusing liquidity in the cash strapped market through various monetary and fiscal measures in the stimulus packages announced. RBI,on the other hand has reduced,the cash reserve ratio by 400 basis points to 5 per cent,Repo rate by 425 bps to 4.75 per cent and Reverse repo rate by 275 bps to 3.25 per cent in different phases since Oct. 20,2008. In response to the reductions in the short term lending rates by RBI,the banks have also started reducing interest rates on home loans. The real estate developers are also contributing in boosting demand through reducing prices on project to project basis and are designing projects as per the consumers’ demand. Given the current economic scenario and a paradigm shift in consumer preferences from luxury towards attaining basic amenities the focus now is on promoting and developing affordable housing. Also,in current scenario,the completion of project is an area of concern for buyers. Therefore,developers are poised and aggressive towards completing their projects rather than launching or starting new projects,to ensure early possession to customers.

The global economy,USA in particular,UK and other parts of the globe,has been showing signs of recovery. There is a widespread feeling that the worst is over. The global economy will turn around with India and China leading the march. In view of this,customers in India should not postpone their buying decision as now the interest is low,market has stocks to pick up from and economy has been showing signs of recovery. l

(As told to PKS)

‘Caution and due diligence are the watchwords’

Anuj Puri

Chairman & Country Head,Jones Lang Lasalle Meghraj

Though there may be some excellent deals available buy the developers,but circumspection and due diligence are the watchwords. Residential property buyers should be aware that,thanks to the confluence of various factors that have until recently applied downward on the segment,they are finally in the driver’s seat. This is now unequivocally a buyer’s market,implying that buyers can and should be very selective about their purchase. A purchase decision should be based solely on the availability of a good deal in the location of choice. Buyers should exercise their right to look into and negotiate upon the selling price,verify the legal antecedents of every option at their disposal and establish the long-term appreciation potential of the property.

The decision to buy depends on buyer’s personal circumstances – that includes his personal needs and how secure he is in his job situation. He should ask himself: Is my ability (to pay down a mortgage) going to be the same in a few years time?

In the current market scenario,developers are increasingly re-focusing from profitability to loss-cutting. While the primary objective has always been to turn a profit,this consideration takes a back-seat in the current slowdown scenario,when projects are not moving fast enough on the market to enable builders to meet their own financial obligations. Buyers should be aware of this fact and inquire about special financial schemes and price incentives offered on a firm commitment to buy.

Timing is also of paramount importance. If a desirable home has come within affordability and passes muster on all other fronts – legal,location and facilities – it indeed makes sense to buy now,regardless of whether prices may fall further or not since property always appreciates in the long run. However,the criterion in such a case should be actual need. In the current scenario,it does not make sense to buy on uninformed impulse. Buyers should remember that every location – and indeed project – has its own individual dynamics,and that these dynamics should be inspected from all angles before one signs the dotted line.

To repeat – buyers should make their purchase decisions based on four key factors – the actual level of need,the suitability of location and property typology,the availability of a good deal and the long-term investment potential. l

(As told to PKS)