The chairman of Confederation of Real Estate Developer’s Associations of India (CREDAI), Kumar Gera believes that the industry would like to forget the year 2008 for reasons more than one, such as the global meltdown started through the sub-prime housing crisis and caused by financial hustling of unprecedented magnitude in the West.
In an interview with Praveen K Singh, he indicates that in the times to come the market will stay in line with the sentiment that emanates from the economic situation that we as a nation find ourselves in.Excerpts:
On the other hand, in most places, builders are holding on, they are sacrificing sales rather than reducing prices. What’s your prediction for the times to come?
This is incorrect. The real estate values across India have softened by varying degrees ranging from 5 to 25 per cent from the highs of 2007.My prediction for 2009 is that the market will stay in line with the sentiment that emanates from the economic situation that we as a nation find ourselves in.
Indications are that as we see lower interest rates, reduced prices and government initiatives (stimulus) become available to the market the unfulfilled pent up needs of 2008 will result in home buyers translating their intentions to purchase into action in the year ahead.
While buyers are waiting in anticipation for the prices to fall, the investors are expecting higher returns to cater to the high risk factors which in the given scenario are too much to ask for.
But, when do you think, things will settle down?
Buyers realise that prices can soften only to the extent that input costs soften.Major inputs in real estate are costs of land, construction-materials and labour, government clearances and approvals, finance costs, plus soft costs of design, marketing etc. To what extent have these come down and to what extent can they come down further is the crux of the issue.
Things will settle in the near future when buyers see that there are no further reduction possibilities on the input side.
Do you see a shift in focus to mid range and affordable housing with a considerable correction in prices of the existing residential projects?
Yes, the trend will be affordability at both ends - at the buyer and seller ends. Purchasers will be cautious to buy only what they can really afford and not what they expect to afford through future earnings.Sellers (developers) will bring products in line with affordability linked to income levels of families in different market segments across India.
To read more, please, visit - ‘In sync with industry sentiments’
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