Started way back in 1998 by its charismatic leader, C N Govindaraju, a civil engineer by profession, Vaishnavi Group has come a long way, carving a niche in the upper income group segment of developments, leaving an indelible mark amidst its expanding customer base with its single-minded focus and stringent quality control. The company is Bangalore based and explicitly focused on making a mark in the real estate segment, as the most admired brand for its integrity, commitment and for exceeding expectations consistently. Incidentally FY 2015-16 recorded nearly 40 per cent referral sales, signifying high levels of customer satisfaction and trust.
- How do you see the real estate market poised in India Today?
The overall demand and sales traction in the high-value / luxury segment is quite muted at this point.
However, in FY 2016-17, we have seen good demand and absorption of mid-segment housing – typically defined as apartments in the range of INR 40 – 80- lakhs – especially in markets such as Bangalore, Hyderabad and Pune.
With the introduction of the Real Estate (Regulation & Development) Act, we see this trend continuing as customer confidence will get a boost and they will be able to take a firm & informed decision to go ahead with the purchase of a property.
- What’s your view on the Real Estate (Regulation and Development) Act?
This will be a game changer in our view, and will impact the real estate industry in a positive manner. As the industry in general and developers in particular move towards an era of accountability and transparency, the major beneficiaries without doubt are the end consumers, whose confidence and morale will be bolstered. This, in turn, will signal better and faster home sales and possibly a spurt in launches in some key markets.
- REIT and FDI, which will dominate the market for Real Estate and Infra projects over next 2 years?
REIT, in its current format, is not as clear and well defined as it ought to be and vis-à-vis FDI in Real Estate, a lack of clarity and ambiguity persists. Hence, in the next 2 years, we definitely feel that FDI will dominate the market for real estate and infrastructure projects.
- Which segment among, Real Estate, Commercial property and infra, do you think will contribute maximum, in revenue terms, over the next 2 years?
Infrastructure is likely to play a major role as India invests in Nation Building. Apart from the many infrastructure projects currently underway, several more are on the anvil. As such, while commercial office development and absorption has been encouraging in FY 2015-16 and 2016-17 (first two quarters), in the medium term (2 –3 years),we see this stabilizing while infrastructure projects will continue to move forward at a rapid pace in the medium to long term.
- Affordable housing is commercially viable?
The Finance Bill 2016 has provided income tax exemptions for buyers of homes under 60 square metres of carpet area in non-metros. Added to this, there is service tax exemption which will further encourage buyers. Developers also stand to gain due to these exemptions and the benefit of the proposed 100% deduction of the profits from affordable housing projects . As the environment is becoming more & more conducive, affordable housing can indeed be commercially viable.
- There is so much stress on luxurious lifestyle in real estate marketing these days, is that the only way to move ahead?
Given the current market sentiment, and the spate of choices available to the customer, it does become necessary as a means to convey the uniqueness of the product offering. This is a trend that we have witnessed in real estate marketing for a long time and we are likely to see this continuing in the times to come as well.
- What is the key change you strongly feel that the Government must do in policy and permissions terms?
The Government must make a concerted effort to further reduce the interest rate on home loans while at the same time, take steps to extend the loan tenure in the case of the individual home loan borrowers. This will ensure that a larger segment of potential home buyers become eligible for home loans which in turn will boost home sales and positively impact the real estate market.
At the same time, just as the RERA will give customer confidence a major boost, it becomes imperative that the approval and sanctioning process for new projects undertaken by developers is well-defined and time bound so as to ensure timely launch and delivery of projects.
- Is the industry facing shortage of skills? Which areas? How are the Real Estate players bridging this gap?
Yes, primarily due to a shortage of skilled labour. This has impacted developer time-lines and project delivery.
Developers are increasingly investing in technology such as pre-cast. This will help in faster delivery of projects while also providing enhanced quality. However, this will have a cost implication as far as the developer is concerned and possibly impact the customer as well.
- How do you think realty firms would benefit from government’s flagship schemes such as ‘Housing for All by 2022’ and ‘100 Smart Cities’? As Most residential developments continue to be in the premium and luxury categories. What happened to the concept of affordable housing?
The government’s flagship schemes will provide benefits to realty firms as more opportunities get created, not only in the housing sector, but in the infrastructure, retail and commercial offices segments as well.
Today, there is increasingly a conscious move towards mid-segment housing. As stated above, with the income tax & service tax exemptions announced under the Finance Bill 2016, the concept of affordable housing is likely to get a boost in the next few years.
- Do you see property prices coming down? If no, why not? If yes, how and when?
Given the high input costs including cost of land, material, labour etc, we do not expect property prices to witness a downward movement.
- What kind of projects are getting funding from investors these days?
We see that mid to large sized projects are attracting funding from investors. We are also seeing good FDI interest in the affordable segment.
- How is the outlook on Residential property in next 1 year?
We advocate moving forward cautiously with a major emphasis on getting the location, unit sizes and costing right. Avoid impulsive purchases or project development opportunities. Phasing out the development and delivery is also recommended.
- In the next two years, what are the two trends that will define the future of the industry?
Technology will increasingly play a key role especially in the current scenario where there is the perennial problem of a shortage of skilled labour.
As consumers become more and more demanding and discerning, and given the stress of daily commute in large cities, projects that are in close proximity to metro corridors, infrastructure projects and the like will see increased demand. This apart, the key factors of optimal unit sizes, well-planned & thoughtful amenities and above-all, sensible pricing will be a key differentiator.
“Environment for Affordable Housing is becoming more conducive”, C N Govindaraju
