According to an Ernst & Young survey on real estate developers titled ‘Realty Pulse', a majority of developers foresee the Indian real estate sector embarking on a high-growth trajectory in the long-term, despite the momentary slowdown witnessed over the last 12 months. The qualitative survey conducted by Ernst & Young across six prominent cities comprised of NCR, Mumbai, Pune, Hyderabad, Chennai, Kolkata and Bangalore and forms a part of the FICCI-Ernst & Young Real Estate Report.
The survey reveals that a vast section of respondents is inclined to venture into affordable housing, if certain enablers like government support, basic infrastructure and low-cost land are made available. Almost 35 per cent of the developers define the capital value of affordable housing in the range of rupees 1 to 1.5 million, followed by another 35 per cent of developers who define the value in the range of rupees 1.5 to 2.5 million. 70 per cent of the respondents indicated an inclination to expand beyond the ‘obvious eight' cities, viz, Delhi, Mumbai, Chennai, Hyderabad, Bangalore, Kolkata, Pune and Ahmedabad.
Dr Amit Mitra, secretary general, FICCI, said, "The release of this report at the FICCI International Real Estate Summit will fuel ideas and opportunities while addressing industry challenges and showing the way forward to take the real estate sector to greater heights."Ganesh Raj, partner and leader, Real Estate Practice, Ernst & Young said, "This report is an attempt to bring forth the views and common beliefs of industry stakeholders, while making an attempt to mitigate their concerns. The temporal slowdown in the market will be followed by sustained activity as a result of innovative formats, new geographies and flexible pricing / delivery mechanisms."
The report, to be released at FICCI's International Real Estate Summit in Mumbai on September 10, 2008, underlines the survey respondents' belief that genuine end-users have ‘taken over' from investors and account for 80 to 90 per cent of sales in their current projects.The respondents expressed mixed reaction with regard to land valuation. Most of them seem to be reaching the consensus that land values are likely to see stability over the short to mid-term period and may not witness any appreciation over the next 12 months.In fact, in some of the cities further price correction is expected owing to the changing economics. The present asset class focus for developers continues to be residential, as stated by 70 per cent to 80 per cent of the respondents, followed by commercial and retail. However, going forward, several ‘neo-assets' like ware-housing, healthcare infrastructure and logistics will emerge as an integral part of the developers' future portfolio.
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