By Accommodation Times News Service
Mr. Vijay Mirchandani, MD, Mirchandani Group has been at the forefront in initiating change for the betterment of Real Estate in India. Unlike many he believes in improving the rules and laws that are stifling the Industry rather than accepting the situation as it is. He is a founder member of Confederation of Real Estate Developers Associations of India (CREDAI) India and currently is on the Executive Committee of CREDAI in conversation with Nimisha Gupta.
Q1. With new government in power what changes do you expect in the real estate industry?
Ans. The earlier govt. had somehow lost grip on economy and their populist measures were sinking it further like the land acquisition bill passed few months ago will be making land acquisition for any public infra development project so difficult. Secondly with change in sentiments the demand will pick up And thirdly we feel that the ministries will be more pro active and listening to our industry problems as we are sure they understand that the construction industry can really be a big economic booster for the economy and therefore needs to be encouraged.
Q2. What are your expectations with the upcoming budget?
Ans.I feel that new government will be taking some harsh steps required to boost economy and which in turn boosts buying power of customers to buy home. Secondly we are hoping that the govt. will reduce home loan rates which will bring back demand in the affordable and mid income housing. Credai has already submitted its budget representation to the finance ministry and it’s a long list of our industry wish list.
Q3. Do you think with the new government arrival there will be fast approval and transparency?
Ans. Yes we are hopeful with the new UD & HUPA ministry under such proactive person as Shri Venkaiya Naiduji will be able to make various states see the line of thinking that faster clearance will mean cheaper houses. Let me tell you here that not all states have this excessive delay in approval problem like Andhra Pradesh, Karnataka, Gujarat typically give building permission in 3-4 months so yes Maharashtra particularly Mumbai takes the longest time for permission. The majority of time 1-2 tears is spent getting MOEF (environment clearance) while township proposals takes years at Mantralaya.
Q4. Currently the market is stagnated. When do you expect a revival?
Ans. The market have even very slow for last 2 years mainly due to negative sentiments so much that those who wanted to buy a house or commercial premises were stopped by their well wishers and advisors to delay their purchase. But now with change in govt. there is a big change in the sentiments and the customer knows that the market can only go up. I therefore see the genuine buyers coming in now while the investors will be back in action after few months around Diwali time.
Q5. Comment on “affordable housing is the need for an hour”?
Ans.It is estimated that there is a shortage of 25-27 million homes across the country. This is the estimate by planning commission and research reports by Mcnzie and many other research agencies. However 70% of this is supposed to be in the EWS (economic weaker section) & LIG (low income group) segment while the rest is in balance which is also a huge number in the upper bracket. However affordable housing is a very complicated vast term as the budget changes from city to city and what’s affordable in Mumbai say 30-40lakhs can buy you a 3BHKin Bhopal or Indore. While in these cities affordable would mean below 15lakhs. We at Credai feel therefore area of flat of 80-100 sq mtr should be treated as affordable irrespective of its selling rate and should be given incentives so it becomes more within the reach of a common man. This govt. has already declared homes for all by 2022 and the UD ministry had already called a meeting inviting Credai and other trade bodies like CII, ASSOCHAM, and FICCI to understand how private sector can help in achieving this huge target. So yes we will be seeing a lot action in this area of affordable housing and we developers are excited about the scale that we can look it provided this govt. announces the right incentives like tax relief to buyers and developers
Q6. What trends do you see in the future realty market?
Ans. I see following trends –
1) customers will continue to pay premium to a safe reliable quality developer
2) the customer will prefer to buy in larger gated communities than single buildings even if it means travelling a bit of distance
3) we will see more developers go for green buildings to attract intellect customer who is bothered about sustainability and his carbon footprint
4) the architecture style will prominently get simplified with modern contemporary elevation with more emphasis on the inside layout
5) the developers will reduce its dependence on manual labour and try to mechanize the construction
6) the non metro level cities will see more population growth than metros in coming 10 years
Q 7. Why Mumbai is so exorbitant and will it ever get reasonable
Ans. Mumbai high prices is result of failure on many fronts , it is a classic example of what all can go wrong has gone wrong over decades
– the policy makers have been always blaming the linear geography of the city , it being restricted by sea line , migration leading to huge population , lack of resources etc
What it has failed to tackle is the real problems and that is lack of expansion of roads , public transport and a bad master plan with a very super slow implementation by Mmrda the nodal agency
– for example all across the country say in Bangalore , Pune , Chennai , Kolkata , Delhi you can buy very good apartments in range of Rs 5-8 thousand per sqft while you can buy excellent apartments in gated schemes with club house pool facility for 3-5 thousand in Hyderabad , Indore , Ludhiana , Agra etc
so why is it that Mumbai at these budgets you are thrown out of the city . The state planners and authorities have failed miserably and cannot keep crying over reasons given above for decades while not attempting to solve the real problems.
To give you one example if A developer buys a 10 -20 acre parcel in R zone of planning area in Bangalore, Chennai, Hyderabad,or Indore out of municipal limits but within planning area he will get similar FSI as main city say 1.5-2.75 so he is encouraged to go out for scale and build a township or a group housing gated scheme. But a developer looking for similar lands here gets .2 to .35 fsi only if one crosses Mmrda area say about 100kms away from Mumbai and touch free zone will you get .75 . Or Only if a developer amasses 100 acre + can he go for township policy which is practically impossible for many reasons and even difficult for large developers as collecting such land parcel area is difficult due to very small holdings and then if he is finally able to invest huge amounts of money it then takes 2-3 years for approval choking the developer totally.
This policy which may be ok for Pune , Nasik or Nagpur but it is a total failure for greater Mumbai
also unless the public transport + DP roads reach out to all areas across greater MMR region , the city expansion will keep failing and slums within city will keep increasing in numbers and in its real estate value.