Sales Will Pick Up If There Is No Further Disruption Like Demonetisation: Eros Group’s Avneesh Sood

India’s housing crisis is unique. Housing prices have fallen but homebuyers seem to be waiting for things to improve, says Avneesh Sood, director, Eros Group. In a conversation with Sneha Sharon Mammen, Sood however, also opines that sales will pick up, provided there is no disruption.

Edited excerpts. 

What is the key reason that is corroding India's real estate market? Is it the sluggishness or is it the people who hold a negative viewpoint?

 Ans: The Indian real estate sector has been going through a severe crisis in the last few years. Sales have plummeted, and construction is delayed. Buyers are not in the market and sales decisions have been held back as everyone is waiting for the market to improve. In many ways, India’s real estate crisis is unique. Housing prices have stagnated and fallen and inventory has been piling up. On top of that, there has been a liquidity crisis in the sector, which is making the completion of old projects and new ones difficult.

Investors are still cautious and are not considering housing as an investment as seriously as they did a decade ago. This loss in confidence made investors wary of investing in real estate projects, which first led to subdued returns on investment, followed by stagnation and then correction in prices. With house prices falling over time, investors as well as homebuyers became cautious of buying homes and the crisis just snowballed from there.

With no buyers, cash dried up for builders. Lenders became wary of lending and hence, the vicious cycle began. Demonetisation did not help the cause, and even important and necessary reforms like the GST and the RERA made things worse in the short run by causing disruption in the already struggling sector. However, the government has taken a series of measures to revive the sector and there are some signs of revival now. Although slowly reducing, the quantum of unsold inventory is still high and liquidity problems persist. However, sales are increasing now and the crisis may finally tide over unless there is another major disruption.

Tell us something about NRI interest in the NCR market.

Ans: With the development of housing hubs and larger occupancy in finished residential projects, there has been an appropriate demand for commercial real estate. There has been development of malls, retail spaces, market complexes and shopping plazas. These serve to offer products, clothing, food and beverages, entertainment and medical needs of local inhabitants. Also, there is a request for huge warehouses in these areas due to the development in logistics and e-commerce markets. The idea of co-working spaces is also fast catching up with big companies as well as start-ups. With these trends, the commercial real estate space is also proving to be profitable for investments by NRIs. Commercial units, as likened to residential projects, offer better value for money. The property market in India has been receiving better exposure globally owing to online advertisements and sales pitches by real estate developers. NRIs, thus, have a wide variety of selections to capitalise in the Indian property market.

Tell us something about the Greater Noida market. 

Ans: Greater Noida is now well-connected through the Delhi Metro. Expansion of the Delhi-Meerut Expressway and the Eastern Peripheral Expressway, has added to the pace of real estate development in Greater Noida.  Also, the construction of an international airport at Jewar will further increase commercial growth in the area and help make it an attractive substitute to Gurgaon real estate developers. The newly introduced zero-period policy by the UP government is also likely to recover projects of many builders who have been considered as defaulters due to the pile-up of interest.

We are aware that the value of everything in the NCR hinges on its connectivity to Delhi. The connectivity in Greater Noida has become much better than what it was two years ago. The area is close to all the central places. The transport system of this area is good and the inhabitants can easily travel without facing any hassles. Property prices are increasing with an increase in demand.

Do you think the alternative funding of Rs 25,000 crore is enough support? Should the government step in, in any other way?

Ans: This fund is not sufficient to address the challenges in the sector but this is a much- needed antidote. This also shows the good intent from the government in covering 1,600 projects with 4.58 lakh dwelling units. While the amount may seem small compared with the overall funding requirement, it will play a big role in boosting the sentiments of the stakeholders and ultimately serve as a fuel for economic growth.

Which property segment and range looks most promising in 2020?

Ans: One of the most noteworthy catalysts for economic policy has been the affordable housing segment. Policy initiatives towards housing have always been a core agenda for the government which is proactively working towards a rent-free housing system. Housing For All By 2022 carries the potential to not only bring out the real estate industry out of the slump but also spearhead the economy into the ‘big league’.