No impact of Covid-19 2nd wave on realty: Naredco

Despite the threat of Covid second wave in India, the realty sector might still be able to enjoy the upwards trends with low mortgage rate and continued favourable preference of homebuyers. Niranjan Hiranandani, president, National Real Estate Development Council (Naredco), in an exclusive interview with Bizz Buzz, explained why the surge in Covid cases might not dampen the spirits of the real estate industry

The fractional ownership has picked up through Real Estate Investment Trust (ReiT), which has fractional holding of commercial property. Yes, it is a good thing, it is picking up and hopefully one day, fractional ownership will enter residential properties also

There are two parts to address land problems. One is to create better infrastructure, when you make better roads, railways and metros and expand the infrastructure of the cities, water supply, automatically you create more space. Development should be carried out in a bigger way to provide more space for realty as well

The second wave has certainly hit India in the month of April. Is realty industry prepared to undergo another pause?

The government needs to accept (the ongoing situation) and then take all the necessary steps to mitigate it. Whatever is being done is correct, but what isn't being done is the major issue. As far as Maharashtra is concerned, the State government has already said that construction industry and infrastructure will not be stopped. But they have put some conditions such as (realty, construction firms) will be required to see to that the construction workers are within the sites itself. They cannot be mobile or coming from outside. So, the limitation that has been put now and distinguished from earlier is that there was a complete lockdown and this time there is no lockdown for factories and constructions which has got workers within the site premises or in the adjoining areas. That is a positive part. So, I don't think construction and infrastructure will be adversely affected.

Realty industry will continue its operations with adequate permission received from the government. Should construction workers receive special vaccination drive?

No. My view is different on this. I think in the vaccination drive we have failed. We are the vaccine producers of the whole world, the whole world buy vaccine from us whether it is polio or smallpox, all that was manufactured in India. Now, the entire world has got vaccine, but India not received adequate vaccines. So, we are exporting to the rest of the world, we ourselves are not using the vaccines (produced) within the country. The first and foremost thing is to vaccinate everybody not just the construction workers, or the media people. Everyone above the age of 25 should be vaccinated and this should have been done long back. Now it isn't late, let them (govt.) do it immediately.

Serum Institute has already said that they need Rs. 3,000 crores to double the vaccine production. We are not going to give him the money to do it and buy Sputnik vaccine only, then it is different story completely. Government hasn't done adequate for the vaccine production, distribution and inoculation.

There have been some setbacks for real estate in the past week. With Maharashtra revoking stamp duty reduction and Gurgaon has increased circle rate by 88 per cent. Were these moves by State government really necessary given the upward performance of the industry?

We have represented to Maharashtra government that it must pull back the stamp duty and we have questioned the Maharashtra government that the concession which was given should be restored, (given the special stamp duty concession).

For Haryana, we are going to represent to the Haryana government and Prime Minister that it (circle rates) should be reduced.

In your view, has fractional ownership made investing in commercial real estate easy?

So, the fractional ownership has picked up through Real Estate Investment Trust (ReiT), which has fractional holding of commercial property. Yes, it is a good thing, it is picking up and hopefully one day, fractional ownership will enter residential properties also.

What can be done to promote realty sector as an investment opportunity for the common man?

So, the last 35-40 years that I have been in real estate, so many people have invested into real estate as an investment. Only in the last three-four years there has been a stagnancy in the growth of real estate. After this, I am sure in the next couple of years we will again have a strong comeback as an investment opportunity.

Indian real estate still faces prolong challenges of technology and land availability and acquisition. Your thoughts on how these persistent problems can be addressed?

There are two parts to address land problems. One is to create better infrastructure, when you make better roads, railways and metros and expand the infrastructure of the cities, water supply, automatically you create more space. Development should be carried out in a bigger and bigger way. Once that is done, it will provide more space for realty as well.

There is no dearth of land to do proper planning and proper infrastructure. Land as a resource is not a problem. You have to use land efficiently. As far as technology is concerned, it is an imperative. You can't use technology now. It is like you won't use mobile phone, or a computer.

What are your predictions for luxury housing segment, now that Covid 2nd wave is here?

I think people want better houses now than they used to for simple reason now the consumers have come to value the house. The work from home, men and women are working from home, children are attending schools and classes online from home, so obviously people are ready to buy bigger house, provided that they can afford it. Luxury home segment is a positive story.

Can SWAMIH scheme cover any uncertainty that might impact the realty sector? Are the funds sufficient enough for the realty industry?

No. SWAMIH has hardly done Rs. 4,000 crores out of Rs. 25,000 crores which was originally proposed. We actually need Rs. 1,25,000 crores. So, the fund is insufficient. We have already suggested to the government that there needs to be multiple schemes not just one (SWAMIH) scheme and various financial

institutions rather than one bank doing it.