Sachin Kulkarni, Managing Director - “Artificial Inflation in RE Prices”

“Artificial Inflation in RE Prices”

Prices of Real Estate will not go down since the raw material prices have gone up, said Sachin Kulkarni, Managing Director of Vastushodh Projects

Affordable housing projects will be given infra status in the Union Budget. How will it benefit the sector? Please explain what it means by infra status?
Affordable Housing (AH) deserves Infra status, particularly when the Central government has an ambitious plan of providing Housing For All by 2022 (HFA). A lot of large financial institutions have dedicated funds raised towards Infrastructure which can be made available for AH hence forth, thus reducing the cost of funds to developers. Infra status also put AH in the priority sector lending category, easing out availability of institutional funding for us.
What are the new forms of techniques used in real estate construction these days, and what is your company using?
There are multiple technologies being introduced into construction since last five years. Pre cast, form work, tunnel form work and modular construction technologies are being adapted. Since India has a tropical climate and very diverse geography, specific technologies cannot be adapted everywhere.
We are currently working with conventional construction methods but soon getting into form work technology for our upcoming township.
Due to demonetisation real estate was the most effected sector, was what most experts said, what is your say on the same?
Demonetisation had an impact on the entire economy of the country. Each and every sector was affected by the demonetisation. General perception created by various news was that RE was most impacted. I feel we were as much impacted as the service or manufacturing industry was. Post demonitisation effects will stay for a longer time in RE than other sectors.

Prices of real estate will go down in the coming years, is the atmosphere in the market, do you think this will happen?
Prices have been stagnant in pockets. They may have seen some downward trend in some artificially over inflated micro markets too. RE may not see the kind of appreciation it gave in the last decade, but prices cannot go down since, the raw material prices have been on the upswing.
Will there be more growth in the tire II, tier III cities in the real estate segment?
Yes. tier II and tier III cities will see better growth and appreciation in RE over the next decade. Metros are full upto the brim and job creation has moved to cities like Pune, Hyderabad, Indore, Nagpur, Ahmedabad, etc. fuelling growth in RE in these tier II and III cities. Land availability, low prices and low cost of living will add to growth.

In the budget finance minister had mentioned about Mission Antyodaya will bring one crore households out of poverty and will make 50,000 gram panchayats poverty-free, how will it affect the market?
I think the current RE market doesn't cater to the BPL families. They largely form a part of the rural economy. If the BPL families raise their income to come into the EWS segment, in the long run, it will positively impact the EWS housing demand as well as demand in self constructed housing units, which is good.

Do you think that housing for all is a achievable dream?
I believe that HFA 2022 is achievable. The central and state governments have taken pretty serious steps towards the goal. This itself is a great beginning. They need to support the initiative with innovation in way of doing business, getting RE industry inclose co-ordination with the government's vision, remove hurdles in beurocracy, get approval process online !
It can be achieved if everyone is synced with the goal and we have made a great beginning.

Future plans of the company and future of the sector?
Vastushodh Projects is committed to creating “ End User Driven Value housing “ for the EWS, LIG and MIG segments of the industry. We have been focused on AH since 2009, much before AH became a fashion statement. We are working on 20000 + AH units currently & we intend to spread geographically to new cities with our brands.

What is the condition of private funding in the sector?
Post this budget, acknowledging the government's focus on affordable housing, almost every fund will look into entering AH now on. Till date though every fund showed keen interest in AH, rarely did they sign chqeus for AH projects, which should change for the better henceforth.

Your expectations from the government?
Keep up the good work! Creating housing will also get you votes!! Treat the RE developers as partners!!!!

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