Favourable govt regulations have given a significant impetus in driving the growth of the sector.

- Abhishek Kapoor

CEO, Puravankara

The 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?

As the economy gradually rebounds from the pandemic-led disruptions, the real estate sector has continued to grow resilient. Even during the most challenging period over the last 18 months, the RE industry has consistently been one of the biggest drivers of economic growth. In fact, a recent report by IBEF suggests that the sector will make up 13% of the GDP by 2025. 

A range of factors have contributed to the RE's impressive performance, from customer sentiment, digitised operations to a conducive market environment. With homes emerging as primary sanctuaries of safety and multifunctional spaces for work and leisure, the value of homeownership rose like never before. This led to increased demand across diverse offerings, such as plotted development, ready-to-move-in properties, and gated communities. Furthermore, favourable market initiatives such as unchanged REPO rates, decadal low-interest rates and reduced stamp duties in select states have encouraged more buyers to enter the market.

Realty players underwent a tech-led transformation that ensured a safe and contactless customer experience during a period marked by social distancing. Digitised solutions such as Purvankara's BookMyHome and Purva Presento minimise the need for physical property visits while allowing the customer to make an informed buying decision. We strongly believe that technology will be
the defining characteristic of the real estate industry and revolutionise the home buying experience.

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 translated into giving a boost to the sector?

The affordable housing segment has the potential to drive massive growth in India's real estate landscape. The Government of India has given this segment a major boost since it has announced the PMAY scheme and since then, in the last seven years, has sanctioned the development of 1.12 crore houses. Under the scheme, it has completed and handed over 48 lakh houses to date. In fact, in the last quarter of 2020, 87% of the new launches in the country were priced up to Rs 45 lakh.

The Government has also reduced the GST rate from 8% to 1% for houses below Rs 45 lakh under its Housing for All mission. It has also extended the deadline for Credit Linked Interest Subsidy Scheme to March 31, 2021. As per a report by RICS - Knight Frank, urban areas are expected to cater to nearly 40% of the Indian population, thereby creating additional demand for 25 million affordable units. The key cities that will experience maximum demand will be Bengaluru, Hyderabad, Delhi NCR, Mumbai, Chennai, Pune and Ahmedabad. All these factors evidence that affordable housing will continue to dominate the real estate sector in the future.

The realty industry can hugely benefit from the sustained accommodative stance from the Government. This includes and is not limited to minimising transaction costs, reducing stamp duties and incentivising home buying. Over the last few years, favourable government regulations like RERA and continued FDI investments have been a significant impetus in driving the immense growth of the sector.

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?

One of the most pressing challenges that builders face is the continual spike in raw material prices. The price of raw materials has a direct and significant impact on the overall project costs. Additionally, the availability of skilled labour and delay in approvals (e.g., construction commencement and power sanctions) can also affect the timely completion of projects within stipulated costs.

At Puravankara, we consistently work to shield our customers from any price hikes. Our cross-functional teams constantly identify agencies to optimise the use of raw materials and mitigate costs wherever possible. We also religiously adhere to all the existing regulatory frameworks to minimise delays in the procurement of approvals. Higher tech intensity across our operations, such as PropTech and ConTech, has enabled us to optimise the use of our skilled labour force and reduce construction timelines.

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 Special Window for Affordable and Mid-Income Housing (SWAMIH), introduced in November 2019, has given developers several opportunities to complete their stressed projects and provide relief to the investors. After analysing the pain points of the beneficiary, they work with the management on a fee-based model. It also helps developers in fund-raising, monetising assets or selling leased assets and generating equity. 

This is especially important for the homebuyer who awaits their dream home, and this scheme makes that dream a reality.

The RBI has also taken a proactive stance to ensure liquidity and 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 accommodative stance taken by the Reserve Bank of India to keep the REPO rates unchanged has given a boost to the revival of the real estate sector. Several banks have brought down their interest rates to their decadal lowest, which has helped sustain the interest of more homebuyers in the residential segment. We have witnessed the direct impact of these REPO rates reflect in the results over the last two quarters.

There could be more accommodative stances that financial institutions can take to help transform the realty sector, and passing down the benefits in a timely fashion would be a start. Another example would be where ''Affordable Housing' has been awarded 'infrastructure status', but that has not been deployed by the banks. These proactive measures would certainly be very encouraging to the sector.

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

Market overview: The real estate sector is poised for exponential growth over the next few years. It has undergone clear signs of consolidation, with the market share of larger, organised developers having grown to over 24% in FY21 of Tier 1 residential sales value as against 11% in FY17.

Customers: With homeownership regaining prominence and real estate strengthening its position as a high-yielding investment, the demand will sustain in the long run. There is also a change in homebuyers preferences- spacious interiors, high-end amenities, seamless personal mobility, access to green spaces and intelligent home features. As a consequence, the rise in demand for luxury and ultra-luxury projects will certainly outlive the pandemic. We believe that the favourable macroeconomic climate will also significantly boost the sector's development.

Way ahead for Puravankara: Our long-term vision is always to be a trusted developer that delivers superior quality homes and an unmatched customer experience. We will continue to place ambitious bets on the industry and undertake projects that resonate with the market's pulse. We also plan to increase our commercial portfolio by 20% over the next 3-4 years.

With technology as our strongest armour, we will focus on assimilating ConTech, PropTech across our operations and enhance digitisation across our verticals.

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