As the market is picking up pace, we expect the investments in real estate to pour in soon.

- Kushagr Ansal

President, CREDAI - Haryana & Director, Ansal Housing

Real estate sector is one of the key contributors to the GDP of the country. But it has been going through rough seas for the last few years. Can you give us an overview of the sector (across asset class)?

The sector has picked up pace since June 2021, and all segments are performing better. The demand for residential has seen a tremendous change as the demand for larger spaces is looking at an all-time high. The commercial segment is witnessing enhanced interest of the investors, who are looking for safer investments with handsome RoI.

Traditionally, real estate market has been driven by investors. But today we see it as an end user market. Has the transition benefitted the industry? What is the reason for investors shying away from the sector? Do you expect PE/VCs to return to the sector or will it witness further consolidation?

The transition from investor to end-user started few years back in the residential segment, and with COVID, the scale has further dipped towards the end-users. Since Covid, end-user interest has increased mostly due to the all-time low home loan interest rate regime, which was initiated through steps taken by the government and the RBI. As far as investors are concerned, they have shifted their focus towards the commercial segment due to higher RoI and capital appreciation offered by these assets. The PE/VC investments dropped in 2020, but the situation was challenging overall. However, as the market is picking up pace, we expect the investments to pour in soon.

The government has announced various schemes to boost the real estate sector, especially the residential segment, with "affordability" being the focus. How far have the benefits of these schemes actually translated into giving a boost to the sector?

The Reserve Bank of India (RBI) and the Indian government have implemented a number of measures to help the real estate sector. The government recommended states to treat Covid-19 as a Force Majeure event; many states did so while extending the project completion deadline, giving real estate developers much-needed relief. To make house loans more accessible for homebuyers, the RBI decreased the policy repo rate and the reverse repo rate. Many major banks and housing finance organisations are now offering low-interest home loans, increasing the number of home loans taken out.

Tell us about the challenges faced by the developers currently (delay in approvals, higher premiums and pandemic effects). Also, according to you, what measures need to be taken to iron out the challenges?

Some actions, such as an increase in circle rates in Haryana or news of rising circle rates in Noida, may have a negative impact on the market. The government could take a page from states like Karnataka, West Bengal, and Maharashtra, which are relieving the strain on buyers by lowering stamp duties to assure the sector's growth. The road to recovery is difficult, and continued government assistance, particularly tailored to the real estate sector, is required.

Your take on stressed projects and what needs to be done to revive such projects. How far has the SWAMIH fund helped in giving relief to the ailing sector?

The government announced a Rs 25,000 crore bailout fund for the stalled projects in November 2019, which was a small part of the Rs 4,64,300 crore in unfinished realty projects in seven major cities up to that point. We must recognise that the real estate market has been facing headwinds due to demonetisation in 2017, then the IL&FS issue in 2018, which devastated NBFCS and caused a liquidity bottleneck, and finally, the current pandemic situation, which has been ongoing since 2020. The number of stalled projects is huge, and a faster mechanism has to be devised to ensure that buyers get their homes as they have been waiting for quite a long time.

The RBI has also taken a proactive stance to ensure liquidity and also slashed repo rates. But the banks are not transferring the benefits to the developers. Kindly share your views on the same and what needs to be done to streamline the processes?

The only appropriate solution would be to grant industry status to the sector. The much-needed streamlining cycle will be complete, and we will witness a new era in the Indian real estate sector.

How do you assess the growth prospects of the sector especially in the northern region of the country as against the development in north, south and east?

Talking about Delhi NCR, we can say that the market has seen positive movement pointing towards a healthy growth. The fact that the percentage of luxury in overall sales is increasing, and other segments getting the desired attention proves that the market here is working as per the demand.

Can you give us an outlook of the sector and your plans by 2025?

Consumers have confidence in the sector, and residential real estate has surpassed gold, stocks, fixed deposits, and other investment options as the most preferred asset class. After deferring it for over a year during the first wave, consumers are expected to resume their home-buying quest as the festival season has arrived. Consumer attitudes will remain favourable for the coming quarters, offering an overall hopeful picture to the sector, given the enhanced relevance of owning a home during the pandemic, supported by the work-from-home trend and all-time low home loan interest rates.

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