Buoyed by the resilient economy and strong demand, residential real estate is on the path of robust growth with healthy demand, supply and inventory dynamics. While the demand for mid-priced, premium and luxury housing is on the rise, affordable housing -the key driver of residential realty is facing headwinds due to rising property rates and high home loan interest rates. In this exclusive interview with Torbit Realty, Vikas Wadhawan, Group CFO, PropTiger.com, Housing.com & Makaan.com and Business Head of PropTiger.com talks about the prospects of the residential real estate, potential of Delhi-NCR market, future of Delhi real estate in view of stalled land pooling policy, impact of high property prices and home loan rates on affordable housing and ways to boost it. Excerpts…Vinod Behl

How do you look at the property market in terms of demand, supply and pricing? Do you think we are in a bull phase and what future trends do you foresee?

The overall market is very positive right now. I won’t call it a bull phase but clearly, I think we are in a good state right now where the property demand is growing across all markets. If you see our latest quarterly report, Mumbai and Pune contributed 61% of the sales. Of the 8 top cities, there is an increase of 8% on the sales side and 11% increase in new home launches, which is a good indicator. By and large, the overall economy is doing well creating positive sentiment and that is one big driver of the real estate demand. Another driver is that post-Covid people have realized the need for owning a home in a society with all basic facilities and amenities and   we see people moving from old style housing and buying into condos and gated societies. People have also started looking for bigger and spacious homes to live a comfortable life with more space for study, work from home etc. which is also driving housing demand.

Then, this pent-up demand of last 5-6 years when the market was not doing great, is creating a positive momentum in the market. Prospective home buyers who were earlier holding their decision to buy home are now taking a plunge. The real estate market has this peculiar behaviour where we see demand going up when prices rise as prospective home buyers have the fear of missing out.

From the inventory point of view, how healthy is the market right now?

The market is healthy, though there are still some pockets in some cities where there is high inventory overhang. But that inventory overhang pertains to the inventory which is stuck either because the home buyers do not have the confidence in the builder to complete the project or those projects have already gone into legal disputes including disputes under IBC. But if you take out that particular portion of projects, inventory overhang is absolutely in a good shape and I do not see anything alarming.

How do you see the potential of Delhi- -NCR property market, especially in view of the big connectivity push through KMP Expressway, Delhi- Gurgaon-Mumbai Expressway, Southern Peripheral Road (SPR) and upcoming Delhi-Gurgaon-Alwar RRTS?

All this infrastructural development is positively impacting Delhi-NCR real estate, especially Gurgaon. Look at the way property prices have gone up in Gurgaon including peripheral locations over the last two years. There are developers who are launching projects at SPR at a price of Rs 15000 per square feet because of the infrastructure development taking places in the periphery of Gurgaon. Whether it is Delhi-Mumbai Expressway, KMP or SPR, infrastructure development and connectivity has brought everything within the city, in turn pushing up demand and property prices.

Gurgaon offers lifestyle luxury living in gated complexes with best of the facilities. On the other hand, in Delhi most of the old-style housing does not provide those facilities That’s why Gurgaon has 40% of the buyers coming from Delhi, especially wealthy businessmen of West Delhi. In Gurgaon, they find fancy new style housing with great amenities like clubhouse, swimming pool, health and fitness centre, shopping large parks and sitting areas and playing areas for children.   Besides Gurgaon, I am very hopeful of Noida though the unfortunate part is that many Noida developers have lost their reputation and the confidence of the home buyers. The positive part is that many big reputed developers like Godrej, Tata, Prestige, Max Estates have entered Noida market, If they go aggressive on Noida  and do some big launches, we will see a lot of revival of the Noida market. But then since the Noida market is price sensitive, these big players need to come up with price sensitive projects.

Since Delhi lacks good quality lifestyle housing, Delhiites have been shifting to Gurgaon and Noida. How do you look at Delhi’s Land Pooling Policy changing that trend?

We have been talking of land pooling for the last 10 years but it is still nowhere in sight. I think somewhere political willingness is missing and the centre-state dispute has always impacted the Delhi  real estate market . Moreover Delhi is struggling with infrastructural issues amid rising population  as the city was planned 40-50 years back and we do not have redevelopment policies in place. Land pooling is absolutely necessary and needs to be expedited for the revival of the real estate in the Capitaln. Together with this, there is a need to put redevelopment on fasttrack with sound redevelopment policies.

With rising home prices and high interest rates , affordable housing seems to be at crossroads, especially as its share in the overall housing sales has come down significantly. Your comment.

Today, when the land prices and  construction cost, are so high, it is not feasible to provide affordable housing within Rs 45 lakhs in cities like Gurgaon in the Delhi-NCR, leave aside Mumbai where land is prohibitively expensive. The government needs to upwardly revise the price limit of affordable housing in big centers. The government should subsidize land for affordable housing  and do partnership with private players to make it commercially viable for the real estate developers. It can also help home buyers by way of interest subsidization.  As a long term policy, the government should develop more and more  job-generating commercial centers with proper infrastructure and connectivity ,away from bigger cities to leverage the benefits of low land prices.

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