Real Estate Deserves Greater Transparency

“Structural changes at the regulatory level, swift policy action to resolve land acquisition issues, speedy single-window clearances of projects, will improve industry perceptions,” feels Ashish R. Puravankara, Jt. Managing Director, Puravankara Projects
Brief us on the recent status of real estate market in India. By all indications, the prognosis for the real-estate sector is stable. The Ministry of Housing estimates the short-fall in this segment to be about 25 million.  Prices are holding firm, all major real-estate markets reported over 10 per cent increase in property prices over the last quarter.  The interest rate regime is trending downwards.  At the global level, Indian real-estate sector holds investment promise, because India offers better returns than the global average.  The depreciating rupee has been a key driver of NRI investment in India on account of attractive valuations.   On the whole, I believe that developers with a reputation for quality and affordability will do well.
Could you highlight the reasons behind slowness in real estate demand? In a world of interlinked fortunes, the recession in the euro-zone has had a ripple effect across the global economy.  Macro-economic variables notwithstanding, demand in the real-estate sector remains stable.    All our recent launches have done well. One of the lessons learnt in the recent years is the importance of prudent pricing.   Properties that are priced correctly and launched at good locations continue to do well.  With interest rates likely to fall and execution of FDI in multi-brand retail imminent, the industry should expect an upswing.
Additionally, banking institutions have cut down on their lending to the real estate sector, what are your strategies to cope up with this kind of situation?Banks continue to underwrite companies with a good track record and proven execution ability.  The RBI’s recent reduction in the CRR will infuse more liquidity into the banking system, thereby prompting interest rate cuts.  I believe that a 100 – 150 basis point reduction in interest rates would bolster consumer sentiment and augment absorption levels. Puravankara is poised to capture the ensuing demand with a mix of completed, under-construction and new project launches.
You have recently ventured into Saudi Arabia, could you discuss the objectives of the same? We ventured into Saudi Arabia to cater to the increasing demand from the NRI community over there.  Expatriate Indians are ever more interested in investing in properties back home.  With the opening of our new office in Al Khobar Damman, Puravankara is strategically situated to tap into the evolving Saudi market.  Our company has a track record for nascent market entry ahead of the category; the move to Saudi Arabia is synergistic with our strategy.   We will continue to pursue emerging markets and enlarge our global footprint as opportunities manifest.
Does the sluggishness in Indian market force you to enter into overseas market?Not at all, I am pleased to report that Puravankara is doing well despite the economic environment.  We posted strong earnings in the last quarter; revenues were up 30 per cent and profits were up 61 per cent YoY.  Our new product launches under brand Puravankara in the premium segment and Provident in the affordable segment are well-received.  We plan to scale up execution and expand the geographic reach of both our brands.
Overseas expansion is part of our growth strategy – one that we intend to pursue aggressively.
What is your investment plan for this venture?  At this juncture, we have opened a sales office in Saudi Arabia to tap into the NRI market.  Our focus is to ramp up sales and marketing efforts across the middle-eastern region.
What are the other overseas venture in pipeline?We are exploring options in other markets and will announce our plans shortly – stay tuned! 
It has been reported that the CCI is investigating as many as 70 real estate developers for malpractices, is there any way to make this business really ‘transparent’?My understanding is that the Competition Commission of India (CCI), investigation relates to purported ‘one-sided’ contractual agreements with consumers, as opposed to operational issues.  With that said, there certainly is scope for greater transparency in the industry. Puravankara is making a concerted effort at instilling best-in-class practices with respect to disclosure and investor interactions.  Furthermore, we are reviewing processes on an ongoing basis to augment product quality and deliver a superior customer experience.   These initiatives should bode well for our brand.
One of the biggest stumbling blocks in the industry is delays in approvals and project clearances. Land development control is regulated at the State level, which makes real-estate development rather region-specific. A surfeit of approvals and arcane laws make real-estate operations somewhat restrictive.  Structural changes at the regulatory level, swift policy action to resolve land acquisition issues, speedy single-window clearances of projects, will improve industry perceptions.
About Puravankara Projects LimitedPuravankara Projects Limited is a leading real estate company in India, with significant presence in Bangalore, Kochi, Chennai, Coimbatore, Hyderabad, Mysore and overseas in the Middle East, Kingdom of Saudi Arabia and Sri Lanka. The company has the distinction of being the first developer to obtain FDI in the Indian real estate industry through a joint venture with Singapore based Keppel Land Limited, the property arm of the conglomerate Keppel Corporation Limited.  Two projects under the joint-venture initiative are underway in Bangalore and Kolkata. Provident Housing Ltd. is a wholly owned subsidiary of the group.  It was established in response to the growing demand for mid-segment housing. Currently we have 12 million square feet of projects are under development.

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