Avoid over-leveraging and stay well-capitalised: Keki Mistry
- Second day of NAREDCO– APREA’s biggest three–day ‘Real Estate and Infrastructure Investors’ Summit (REIIS) – 2020’ further pin hopes for the revival of the real estate sector
- The residential housing sales in the July to September quarter is 67% of the Q1 of 2020: Anarock
- Private Equity investments in the residential real estate must grow: Anarock
Mumbai, November 26, 2020: Calling the existing home loan rates the lowest in the last four decades, Mr Keki Mistry, Vice Chairman and CEO, HDFC Limited has predicted that the the lower interest rates regime will continue for another six to twelve months that will give the best home buying opportunity for the home buyers. He was speaking at the ongoing virtual NAREDCO’s ‘Real Estate and Infrastructure Investors’ Summit (REIIS) – 2020 in association with APREA.
“The home loan rates have been the lowest in the last four decades. For the next six to 12 months, the benign interest rates environment will continue. The growth in the economy and the real estate has been sharp. The factors like the RBI infusing much needed liquidity into the sector, various concessions given by the Government and the developers like the stamp duty relaxations have extended the best buying opportunity for the homebuyers. The trend will continue with the lowest interest rates regime,” he added.
Mr Mistry cautioned that the RBI may face some pressure owing to the higher inflation that will reduce its ability to cut the rates further. He also observed that the banks are now distinguishing between the strong and weak developers for lending, hence improving the quality of balance sheets, avoiding over-leveraging and staying well-capitalised will help the developers float well in the market. Mr Mistry also predicted that the investments in creating co-working spaces will grow in the near future and more consolidation will happen at the projects level.
Citing that the festive season around Diwali this year has witnessed a major turnaround for the residential real estate segment by registering a growth of 83 percent in the number of residential units and the growth in the sales value by 72 percent over the last year, Mr Anuj Puri, Chairman and Founder of Anarock Property Consultants observed that the affordable housing segment will continue to grow. “The residential sales in the July to September quarter is 67% of the Q1 sales of Jan to March 2020, which is a clear indication that the affordable housing segment is back in action,” he added.
In the commercial segment, Mr Puri signalled that this year, about 23 million sqft of new office space leasing is expected while the REITs will continue to attract foreign investments. He informed that the rent collection has been between 97 % to 99.5% during the April to October period that indicated a revival in the office segment. “The joint efforts of APREA and NAREDCO in liasioning with the Government to boost the REITs framework in the country have driven heavy investments in this segment,” said Mr Puri. He further observed that the residential realty was lacking liquidity and the gap could be well filled up by the private equity funding, for which the realty sector needed to have a meaningful dialogue with the Government to attract private equity investments into this segment.
Mr Neel Raheja, President, K Raheja Corp indicated that, “The start of the pandemic saw a few months of zero sales but soon people realized the value of owning a home which saw a severe turnaround. The volume will increase in the coming months and we expect the momentum to continue.”
“On the commercial front, the new leasing market has been slow due to the uncertainty of the pandemic. We are seeing a trend of offices shifting from Nariman Point to BKC; few of the companies are also preferring to move to far-off areas like Navi Mumbai, Thane, etc. Also, we can see 75-80% of the demand for offices is coming from the global companies. People cannot continue to work from home for a longer period of time and we expect the commercial market to be back once things start to move slowly,” he further added.
Mr Vikram Garg, Managing Director, Blackstone observed that as the global interest rates have been low, the global fund managers are bullish on the country like India. The domestic individuals have founded a great investment class, which has created large investment opportunities as a saving instrument.
NAREDCO and Asia Pacific Real Estate Association (APREA), a leading pan Asian trade association with focus on cross-border real estate investment, along with knowledge partner Anarock have organized this virtual ‘Real Estate and Infrastructure Investors’ Summit (REIIS) – 2020’ with the theme of ‘India – Opportunities in the Coming Year’.
Sharing his insights into the SWAMIH Fund, Mr Irfan A. Kazi, Chief Investment Officer, SWAMIH Investment Fund said “In our funded projects, the emphasis will entirely be on construction. The developer has to complete the project regardless of whether the sales are happening or not. The fundamental reason why this funding is coming-in is based on the premise that the completed inventory will sell. The SWAMIH funding is not only for stalled projects but it is also for the stressed projects where the pace of construction has been hampered due to lack of funding.”