Market dynamics, policy regime, skewed towards nudging fence-sitters to be first-time homebuyers: Niranjan Hiranandani

The need for secured assets and aspirations to own spacious homes as remote working is fast becoming the new norm is driving sales of residential properties across the country. Further, investors are also warming up to Real Estate Investment Trusts (REITs), Niranjan Hiranandani, national president at National Real Estate Development Council (NAREDCO).

In an interview withBusinessLine, Hiranandani, who is also the managing director of real estate firm Hiranandani Group, is of the opinion that the regulatory aspects have also brought in a safe and secure environment to the sector. Edited excerpts:

This year, housing sales across major cities have been on the rise? Where is this demand coming from?

The disruptive pandemic has predominantly reinforced the value of owned houses. The need for a secured asset that offers stability and safety in crisis is a goldmine investment against volatile assets. The remote working trend further fuel the urge to own a large spacious home in peripheral cities at attractive price points to integrate new normal living conditions.

In addition, market dynamics and policy regime are skewed towards nudging the fence-sitters to convert into the first-time home buyers and existing ones to upgrade into luxury homes catalysed by fiscal growth levers.

After the initial hesitation, REITs are gaining ground, and despite the pandemic, there were two successful public issues?

REITs are an alternative option for investment in real estate at a low unit price entry point. It reflects growing confidence in commercial real estate as an asset class. The Indian real estate investor has gradually warmed up to REITs. The two successful public issues are just the beginning of what will gradually grow in investor confidence.

Recently Maharashtra Urban Development ministry has amended the Unified Development Control and Promotion Regulations, allowing 5 per cent amenity space for construction in plots. Your comments?

The recent amendment (notification is awaited) aims to infuse positivity for commercial real estate development. If up to 5 FSI is allowed for commercial business districts, then the move will be perceived to augment more commercial real estate spaces to be developed, which will create more employment opportunities. This will also foster the development of more commercial business districts (CBDs) in the state, ensuring equal development across and not just the leading commercial cities like Mumbai and Pune. The move should augur well for the state’s economic growth. It will also allow economies of scale to positively impact the viability of commercial projects.

A lot of residential projects in the country, including ultra-luxury ones, are marred by delays?

The Indian real estate sector was rebooted with structural policy reforms, and the pandemic was a nail in the coffin. The industry suffered from liquidity starving, muted demand, subdued investment, hindered sales velocity, disrupted supply chain, skyrocketing prices of essential raw materials, and acute migrant labour crisis. These challenges uprooted many developers in crisis and stalled up the designated timelines.

With mission unlocking, the industry witnessed excellent sales velocity in lieu of fiscal stimulus but the resurgence of the second Covid wave derailed the growth trajectory. The authorities have been considering a timeline extension to cope up with the delays. Many of the branded developers with strong financial discipline and proven track records will fast-track the work progress and assure timely delivery.

Covid-19 has shuttered smaller players across various industries, while the stronger, larger entities have survived. Did the pandemic have a similar effect on real estate as well?

Any economic crisis – and the Covid-19 pandemic fits the description perfectly – first impacts smaller players across industries, as surviving such challenging situations needs ‘deep pockets. For financially weak players, recent regulatory jolts led to a difficult ground for navigating, and Covid-19 impacted many projects’ profitabilities and viability of the business.

The over-leveraged players opt to deleverage by consolidation, joint development, asset-light model, monetisation, mergers to re-anchor the sinking ship.

RERA has brought in some amount of transparency and accountability to the sector?

RERA is moving in the right direction and is taking the industry to the right aspects of accountability. The regulatory aspect has brought in a safe and secure environment, one in which we see unscrupulous elements being weeded out. Obviously, this also leads to enhanced customer confidence.

On Greenbase’s, an industrial and warehousing platform of Hiranandani Group, future plans?

Greenbase has been working at delivering a holistic slew of offerings for end-users, and there are geographies where we are already working on creating logistics and light industrial parks.

As the vaccination drive gains pace, we are bullish on the Indian economy and the sustained demand for logistics and light industrial parks. Some locations (near Pune, Nasik and Oragadam, Chennai) are ‘work in progress’, while in some other locations, the parks are still on the drawing board.