Dhaval Ajmera - “Sales Converstions have gone up”
“Sales Converstions have gone up” After a few weeks of Union Budget the mood is positive in the Real Estate Sector says Dhaval Ajmera, Director, Ajmera Realty and Infra India What is your take on affordable homes getting an infra status? It's a good thing that infrastructure status has been given to the affordable segment.
“Sales Converstions have gone up”
After a few weeks of Union Budget the mood is positive in the Real Estate Sector says Dhaval Ajmera, Director, Ajmera Realty and Infra India
What is your take on affordable homes getting an infra status?
It's a good thing that infrastructure status has been given to the affordable segment. All the benefits which pertain to the infrastructure projects will percolate to the affordable housing segment such as funding options, taxation, the income tax rules and regulations, compliances in terms of the other regulatory bodies will change, which makes it easier and better than the normal business process.
Real estate is the second highest contributor to the country's GDP and impacts about 300 other industries. Any boost to the real estate sector also has a rippling impact on the other segments too.
The PM's 'Housing for All' vision is a very serious and crucial thing. Indian's are very emotional people when it comes to buying a house. When a person starts earning their first dream is to own a house. By giving a boost to the affordable housing the government has made sure that developer focuses on this segment, which will mean developers launching affordable projects in near future.
Demonetisation has affected the real estate; many feel that this will impact the supply side. Comment.
Demonetisation has had a psychological impact than anything else. If you go to any of the metro cities like Mumbai or Bengaluru 99.99 per cent of the transactions happen in cheque. So why would it really affect? It's not going to affect me but the problem is that someone also started saying that with demonetisation market price will crash by 30 percent. So buyers will obviously wait and see whether the prices are crashing or not.
The announcement of note-ban came on November 8 2016, for one to two weeks people were in their own mindset and dealing with their individual cash issues but slowly by December enquiries started flowing in. Developers also took a very active role and started announcing price assurances. That meant if there is a dip in the price, we assure you that we will pay you back the money or we will refund you the money. The confidence levels started rising slowly. Add to this banks reduced interest rates. Enquiries and sales slowly started pushing up. Buyers also wanted to wait till the Budget. Our sales in February, from the time the Budget has been announced till date which is about 10-12 days, are seeing a lot of improvement. My enquiries have drastically gone up, walk-ins have gone up and sales conversions has also gone up.
Ajmera is also constructing in cities like Pune, what kind of growth are you seeing in such cities?
We have projects in Bangalore, Pune, Ahmadabad, besides Mumbai. In Pune we have projects in the luxury segment and we are also coming up with projects in mid-segment and affordable segment. In Bangalore and Ahmedabad, we are doing mid-size and affordable which is moving at some pace and we are seeing conversions happening from February onwards. The expectation that the market may see a price correction of 30 percent has come down and we are seeing conversions. In January we did good numbers in Bangalore, we did around 70 percent. In February of this year our sales were exceeding of what we did in February last year. So we have already finished our targets of what we were in February last year.
Do you think tier II and III cities will see higher demand going ahead?
Yes, definitely because tier II and III cities will see more projects in the affordable housing segment than in tier I cities. Because in tier 1 cities the affordable housing cap is 30 sq m in carpet area, whereas in tier II and other cities it is 60 sq m. Today a first time home buyer who has a salary of Rs 12 lakh is going to take a flat in a tier II or tier III city because he is going to get his dream home of two bed-rooms flat with 600 carpet areas and a 6 percent interest rate. Why would he not take that up. So definitely these cities are going to have an impact.
You also have projects overseas, any plans to further increase that?
We currently have one project in Bahrain. We plan to start the project this year. The difference we see in this market is obtaining clearances for the project. It's a single window clearance; we don't really need to move from one place to the other for clearances. This also means projects getting approval quicker and hence fast to implement.
In India, is the technology going ahead due to mechanisation?
In India we have seen lot of improvement. But in India we use more of labor-intensive work because we have ease of labor supply whereas in foreign countries we make use of machines because there is shortage of labor. In cities like Mumbai and other places we do see a lot of mechanization being used for construction.
You are known for both commercial as well as residential projects. Any new commercial projects that you are planning to come up with and with REITs?
Right now we are not doing major commercial but definitely more of residential projects. We do have plans for commercials projects in future, especially in Kanjurmarg and Wadala. So these are all in the planning stage but definitely with REITs coming in,
we have targeted to do about 1 or 2 million sq ft of commercial development in Mumbai
So REITs is going to affect the commercial market?
Definitely it is going to become better. You already see people are trying to lease out rather than selling, so that they hold those premises. Once you have assets in place you can list it and sell it in the market which will be of a better valuation which you get in the market today.
What are your future plans? Secondly, any specific expectations that you have as a developer from the government?
We have about 30 to 40 million sq ft of construction projects under the pipeline. It's in various stages in Bangalore, Pune, Ahmedabad and Mumbai. We are coming up with an affordable project in Kalyan, Mumbai. We are doing a new project in Bangalore which is also going to be almost on the lines of the new affordable segments. Wadala Island is of course going to expand and we are coming up with a project in Kanjurmarg.
We are also looking at acquiring projects and start developing projects over there. As far as our expectations from the government, we are really happy with the way the current government has started at looking at ease of doing business.
We expect a lot of online approvals, which have started but obviously there are
glitches that need to be resolved. What is also expected is a single window clearance. This is one thing which we are hoping will be taken for serious consideration by the required authorities. We are hopeful that in the next 2-3 years things
should finalise.
In July, GST is also expected. Comments
Yes. I feel that GST will streamline a lot of things. What we have heard from the finance ministry is that they are going to make it pro-real estate, in terms of, cutting down the cost of GST percentage.
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