Estrade Media Pte. Singapore, recently hosted the 3rd Estrade Real Estate Conclave & Awards 2017 – Singapore, which was scheduled on 6th October 2017 at the Grand Copthorne – Waterfront. The Estrade Real Estate Conclave and Awards is the only India focused, business to business connect engagement for the Real Estate industry organized in South East Asia. The awards night brings together more than 100 business leaders comprising of Real Estate developers, Interior Designers and Architects. Unlike other industry engagements organized in India, where the connect is more local, Estrade Real Estate Conclave provides a global connect at an international platform. Earth Group’s Eden – Nature Living project won the Themed Project of the Year Award. Team Estrade had the opportunity to speak to Naitik Lakhani – Founder, Earth Group at the 3rd Estrade Conclave and Awards 2017 in Singapore. Following are the excerpts of this interview.
About Earth Group
The Earth Group is promoted by Naitik Lakhani and Dilip Lathiya. Earth Group is brainchild of Naitik, which is moving towards by not only completing Residential and Commercial buildings, but also farm houses. At Earth Group, their deepest endeavour is to fulfil the aspirations of each and every individual, who can find their dreams come true through a living space, available in the diversity of project offerings by the company.
Through their constant efforts of creating the best product for the end user, they bring on board the top of the line amenities and aesthetics, along with preserving nature to bring in the highest value. In each of Earth Group Projects, they are bonding customer requirement with their project creation. That care and complete handholding aspect reflects through their projects where they offer to their customers the highest facilities and desired quality standards.
About the promoters Naitik is a Business Administration graduate. He handles the Production team and also develops strategy for new projects. He is involved in all aspects of the business, right from conceptualizing the project to executing the sales. Naitik strongly believes in modern age living with a focuson protection of environment along with the promotion of sustainable development. Dilip’s Forte is Brand Management, selling and looking after overall business admin and HR. He has a great understanding of consumer behavior in the Real Estate markets.
How do you see the future of real estate market in India? It will undoubtedly grow, there is lot of scope as many areas in India are developing We have witnessed that Real estate in Tier II & Tier III cities has constantly seen growth in past few years and in some area, it is stable too. There is an increasing demand for the right type of Housing projects, Commercial projects and or Farm houses which at offered at the right prices shows a tremendous growth. Educated and Morden homebuyers want value for money with basic infrastructure with top amenities.
In the past, we have seen that Gujarat & Maharashtra has been more stable and is driven by end users the customers are moving from Investor based to end user base.
What’s your view on the RERA?
The real estate sector has lately been witnessing a series of corrective measures. Post the Strike on the higher denomination currency notes by the Indian Government, the next big step is pointed cleary towards the Benami Properties in the country. To curb the Illegal activities in the Real estate industry, RERA is in the right direction that will build a stronger base for the future growth of the Real Estate in India.
The Modi government is in full swing to eradicate the illegal stashing of money in properties and we as Earth Group are happy to see these changes happening in the industry. This ultimately will lead to a professional, transparent and organised Real Estate in India. Those who do their job properly will get recognised and uncertain creating entities will have to shut in long run.
How introduction of RERA is set to change the future of Real Estate market in India? Introduction of RERA is set to change the future and in longer term it will have bigger impact on Real Estate Prices, problem of Delayed Deliveries, Transparency and quality construction. Customers will gain confidence, even if they do not know the Developer or Builder; Customers can fearlessly deal and buy their dream home, property. This is because there is an industry watch dog (RERA) to take care.
Real estate industry need to go back to the basics and pay attention to the customers wants, and RERA is the means to go back to basics. “The world is changing, disruptive is the key word in today’s world; ‘Normalcy’ is what real estate needs to go back to.
REIT and FDI, which will dominate the market for Real Estate and Infra projects over next 2 years?
REIT will dominate, as it is a high quality source of funds to cash strapped developers and at the same time ensures greater flexibility, accountability, liquidity and transparency for big and small investors. Not only this, Reforms in FDI policy and relaxation of norms in Real Estate Investment Trusts (REITs) will benefit the realty sector, especially the commercial segment. In 2016 when the government unleashed a second wave of FDI reforms, allowing 100 per cent inflows in civil aviation and food processing sectors while easing norms in defence and pharmaceuticals. The measures announced by the government regarding FDI as well as REITs will facilitate investments into the country. The growth of these sectors will directly benefit the real estate market in India, especially office, retail, logistics and warehousing segments, among others.
“In a country where the concept of housing ranges from hole-in-the-wall flats to billion-dollar homes, affordable housing could revive the fortunes of a flagging real estate sector.”
Which segment, Real Estate, commercial or infra, do you think will contribute maximum, in revenue terms, over the next 2 years? Well, according to our Survey and experience both the segments will contribute maximum in terms of revenue over the next 2 years. Modi government is aggressively developing infrastructure which enable the mass to move from Rural to cities and this increases the demands of Real Estate for residential and Commercial.
Recent stats shows that the Indian real estate market is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 per cent to the country’s Gross Domestic Product (GDP). In the period FY2008-2020, the market size of this sector is expected to increase at a Compound Annual Growth Rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs. The private equity investments in real estate increased 26 per cent to a nine-year high of nearly Rs 40,000 crore (US$ 6.01 billion) in 2016.
Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times. The office space absorption in 2016 across the top eight cities amounted to 34 million square feet (msf).
Affordable housing is commercially viable? This product is going to dominate the market nationally? In a country where the concept of housing ranges from hole-in-the-wall flats to billion-dollar homes, affordable housing could revive the fortunes of a flagging real estate sector. The affordable housing segment is expected to be the next big growth driver of the Indian economy with property pundits predicting a phenomenal growth rate of over 30% in the medium term.
There has already been a significant surge in affordable housing projects across eight major cities. Homes priced below Rs 50 lakh accounted for about 71% of the total launches between January and June 2017, a significant 52% increase from the corresponding period in 2016. Affordable housing is finally losing its ‘down market’ label and turning into a serious and respectable sector – a possible game changer for the real estate industry.
There has been way too much stress on luxurious lifestyle in real estate marketing, is this set to change? Yes, there is too much stress on luxurious lifestyle on real estate marketing and no this will not change reason being there is continuous demand for top end residential spaces over the past few decades and there are several reasons behind this first is opening of Indian Economy since 2005, second emergence of class Indian developers who have anticipated this demand and third most important is the changing lifestyle of consumers who want world class decors, amenities and construction of building, along with innovative materials and gadgets right from bathroom fittings, all the way to interior décor.
“We see large opportunities with the Government’s new
Housing for All by 2022 and 100 Smart Cities Initiatives”
What are the key changes that the Government must do in policy and permissions terms? Government should make the process simple and fast and not change the regulations in a short duration of time, so that industry can stabilize. The single window clearance system should be enforced in letter and spirit resulting in reduction of timelines which in turn will have a positive impact on project costs.
Currently the process of approvals/sanctions/permissions from the various statutory bodies is a tedious one which is responsible for delays and cost over runs, eventually the brunt of which is borne by the customer. The concept of Smart Cities will redefine the way projects are planned, implemented and operated, newer locations coming under limelight.
Is the industry facing shortage of skills? Which areas? How are the Real Estate players bridging this gap? Real estate industry is one such industry where skill and innovation is the key aspect, the industry as whole is still in the process of evolving itself. Due to which many skilled manpower are yet to get attracted towards this industry but this is changing slowly with technology boom, the skills are also developed easily, all functional area like finance, architecture, project planning, QC Sales & marketing area are facing similar situation.
To bridge the gap many developers are getting into technical collaboration with foreign players and FDI in this industry pushes the manpower to learn more.
How do you think realty firms would benefit from government’s flagship schemes such as ‘Housing for All by 2022’ and ‘100 Smart Cities’? We see large opportunities with the Government’s new Housing for All by 2022 and 100 Smart Cities Initiative. Surat city, in which we operate majorly, is one of the first Smart Cities selected by Government for the SMART Cities project, and Earth Group has already pioneered premium affordable housing for the mid income group back in 2015. Our projects in Gujarat are a step in the direction of ‘Housing for All’. These project initiatives will be just a basic support; however, given their small scale, they cannot be the only thing for company’s growth. Reason being cost of construction materials is growing and Government’s project initiatives are majorly catering to the masses, who want affordable houses.
“Instead of volume investments by investors they have now become more cautious”
Do you see correction in property prices? In recent surveys and market feedbacks from different consulting firms, we have observed that majority of home buyers dismiss the possibility that recent policy changes, could lead to price corrections in the property market. In fact, prospective buyers and sellers across the country, seem convinced that wishing for cheaper houses in 2017, would be fancyful and wishful thinking. These are the findings of a survey by Track2Realty in ten cities – Delhi-NCR, Mumbai, Pune, Bengaluru, Kolkata, Chennai, Ahmedabad, Lucknow, Coimbatore and Hyderabad.
This is quite striking, that more Indians now dismiss expectations of price corrections, as compared to 2012, when 70% home buyers had refused to believe that prices would correct, at a time when there was a lack of policy changes, legislations and transparency.
We feel that there is an organised mis-information, spreading the news that property prices would correct, to keep the end-users away from the market. With more stringent laws, there will be less supply in the housing market and hence, property prices will only be majorly stable or increase with minor difference.
What kind of projects are getting funding from investors these days? The projects which gets funding from investors are the one which give them higher returns in terms of property valuation appreciation and one which gives them a good rental income. Instead of volume investments by investors they have now become more cautious and invest in the property which in terms of location are of mix use or integrated townships.
“Concept of integrated townships and smart cities which will redefine the projects”
How is the outlook on Residential property over the next 1 year?
Well to be honest, the prevailing pace will continue but at the same time it will witness a significant change to adapt to new legislation implemented by government like RERA and the growth will be stable as people are still recovering from demonetisation. However, there will be increase in demand for commercial spaces as large MNCs are setting up their offices in India resulting in increase in housing needs too.
In the next two years, what are the two trends that will define the future of the industry?
The next two years will witness the concept of integrated townships and smart cities which will redefine the projects that are planned and implemented, new locations which are not developed will come into limelight like for example Surat city, is one of the chosen smart cities, and It has now seen increase in property development in nearby regions like Palanpur, Pal, and Saroli. Areas like Saroli have seen growth in textile commercial spaces. Development of infrastructure from government and tax policies will define the future course of action. Consumers are now able to choose, to invest in a project at the pre-launch, the construction stage or even ready to move in apartments, depending on their needs and disposable income level. The commercial space absorption across locations has also been very high, leading to an increase in the market share. Due to the long gestation periods, infrastructure projects will start yielding revenues in the longer term.