HYDERABAD, MARCH 3:
The country’s real estate sector is passing through a phase of consolidation post demonetisation, the Union Budget and changes in the regulatory environment, according to Gitamber Anand, National President of real estate body Credai.
In an exclusive interaction with BusinessLine, the Credai President said, “The sector, which had faced a number of headwinds in the past, is seeking to shrug off legacy issues and going on to become a more organised business.”
“As realty braces up to the new GST regime, the focus is on consolidation. The organised real estate segment is seeking to address the huge demand for housing in seven major metros and tier 2-3 cities, together seen to have a demand for about 60 million houses,” he said.
Housing shortfall is likely to be there for over next 5-10 years. Both commercial and retail segments too will see increased offtake as the economy is projected to sustain its current growth momentum.
Housing sector faces the legacy of a perception that it has a huge component of cash transaction. With a member base of over 12,000, Credai is seeking to address this through fair pricing, transparency and is being aided through purchase of property by raising loans, Anand said.
“This fair business approach will play a major role in attracting investments too into the sector,” he felt.
Post demonetisation, from January things are getting back to normalcy and February has been good. However, this does not mean big upside to the sector’s growth.
“We believe the sector will grow steadily over the next 12-18 months. Prices too have stabilised and in some segments have also retracted by about 15-20 per cent,” he explained.
The issue of trust deficit is being pro-actively addressed and buyers are getting to gain from the new norms, drop in home loan rates and encouragement from the Government, all translating into lower overall costs in the long run, the Credai President said.
“The year 2017 will see a slow run-up in terms of increase in sales. There is not much land left in good locations in major cities. This means, when things get better, and demand goes up, prices will spiral up,” he said.
The affordable housing segment, whose definition has changed over the years to cover housing up to Rs.65 lakh, would be a major focus area for most developers and become a demand driver for high volume and lower margin business.
Referring to GST, he said, “We hope to be placed under lower slab. The real estate and construction sector, which employs over 5 crore people, is the second largest job creator after agriculture. The growth of this sector will play a big role in the growth of the country’s economy and help create jobs.”
Home Buyers Lose The Agents And Opt For Digital Route
With passing time digital media is becoming the preferable choice of the buyers as well as the developers. Developers are going to online platforms and social media to reach out to their target audience and also the buyers are increasingly going online for searching homes. This makes digital media a mainstream platform to advertise in real estate industry.
C Shekar Reddy, Immediate Past President of CREDAI explained why digital platforms are becoming more popular in the real estate. He said, “IT employees, NRIs form the majority of home buyers today who are tech savvy and use their smart phones for searching homes. Also most of the home buyers today are being influenced by social media while purchasing a home or property. As a result builders and realtors are putting utmost focus on digital platforms to reach out to potential consumers”.
The growing trend can be observed by the way the builders are spending on online platforms. It is far more than traditional marketing and publicity avenues unlike past. Builders have also become conscious of their presence and reputation on property portals and other online platforms. They are taking each step carefully so they can make the right connect with their buyers.
K Sreedhar Reddy of Telangana Real Estate Developers Association explained the growing importance of digital media, said, “Digital platforms and social media provide builders a chance to reach to the consumers in a more focused way. Also they can track the efficiency of strategy online. The cost of acquiring customers through online and social media is also lesser when compared to other advertising channels. Therefore digital platforms are becoming popular in realty sector”.
As per the inside sources, this trend is not only visible in the metros like Mumbai, Chennai or Hyderabad but also in Tier II & III cities. Customers as well as developers, both are relying more and more on digital platforms.
CREDAI New India Summit
CREDAI is the apex body that represents over 12,000 private Real Estate developers spread across 23 state-level chapters and 177 cities in India. Established in 1999, CREDAI has worked hard to make the industry more organized and progressive by networking closely with Government representatives, policymakers, investors, finance companies, consumers and real estate professionals.
The New India Summit is another such effort from CREDAI to direct focus on Tier II, III and IV cities and develop them to be the forerunners of success. CREDAI New India Summit is all set to unleash the potential of an emerging India. This one small step has the power to give way to a new India.
For the longest time, our leaders and foresighted influencers have put all their time and energy in developing the Tier I cities namely Bengaluru, Mumbai, Delhi, Pune, Ahmedabad, Hyderabad, Chennai and Kolkata. No doubt, these cities have really changed the way people look at India today. These cities are the epitome of advanced technology and modern culture. But they also face challenges due to the grave pressure of urbanization. Decreasing quality of life, increasing the cost of living, overpopulation and unemployment, increase in transit time and traffic congestion, expensive housing, hospitality, education and healthcare facilities are some of the issues that all the Tier I cities face today.
According to a report, smaller cities are developing 79% faster as compared to metros with just 21%. Our of the 12,000 CREDAI members, 76.77% of them are from Tier II, III and IV cities. Looking at the scenario, it is only innate to divert the energies in developing the areas which still have potential. Thus, offering a good quality life to people in those cities itself and taking the pressure off of the Tier I cities.
The Forbes Magazine has said small cities are India’s emerging business locations. The government has also been putting dedicated efforts into schemes that directly benefit the growth of Tier II, III and IV cities. Sustainable economic development, improving infrastructure and transportation, increasing employment opportunities, and introducing technologies for rapid urbanization are some of the prime agendas that the government has been taking actions on.
The CREDAI New India Summit will take place on the 9th and 10th November 2017 in Nagpur, Maharashtra.
Walmart’s First India Dark Store Opens In Bhiwandi
Walmart Stores now open its first global fulfilment centre, or ‘dark store’ in India. They wish to speed up the operations here in order to benefit from their fast adopting online retail services.
The store is spread in 45,000 square feet centre at Bhiwandi near Mumbai. They will serve kirana stores and other B2B businesses through online orders and they shall also stock packaged consumer products and home supplies.
Krish Iyer, CEO at Walmart India said, “Metro cities are great markets for consumers but the availability of large real estate at a reasonable cost is a challenge”. He explained almost half its sales are generated out of its 20-odd big-box formats through online and sales staff ordering.
Walmart’s Indian unit launched its online platform for members of Best Price Modern Wholesale stores three years ago. However, it was limited to the cities which have the stores. Now Walmart will begin an online platform without any physical store presence.
Iyer further explained, “The idea was conceived nearly a year ago and we first piloted it in Lucknow. Last-mile delivery and the time taken are a challenge but we have to manage that. We have promised delivery within 24 hours to our members”.
On the other hand, Amazon, over a month ago, has also opened its largest fulfilment centre in India on the outskirts of Hyderabad. This gives them 45 centres and warehouses.
Walmart, about four years ago, had agreed to buy Bharti’s 50% stake in their wholesale business that operated Best Price Modern Wholesale stores. They franchise and supply agreements related to almost 200 Easyday retail stores was terminated. With the JV getting dissolved, Walmart now sells goods only to traders, institutions and kiranas.
Walmart will again aggressively begin its store expansion which had been put on hold for some years now. Iyer concluded, “We will open 5-7 stores next year and add another 8-10 in the subsequent year”.
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