Growth Trends in Real-estate

TDI Infratech with more than 25 years of experience has been developing projects in Delhi NCR and the tier-II and tier-III cities in the northern belt of India.  Akshay Taneja, Managing Director, TDI Infratech Ltd. shares his views on the recent developments in the real-estate sector.   What are the reasons for developer’s inclination towards tier II cities? Tier -I cities are now getting saturated while, smaller cities and non-metros are gearing for development. Therefore, developers too are broadening their avenues and reaching out to tier-II and III cities. For instance, in Kundli, Panipat, Mohali I & II and Moradabad, TDI influenced the forward surge of these towns by delivering five townships spread over an area of 2480 acres. Also, with Smart cities and Housing for All schemes, there will be an upsurge in job opportunities, sound infrastructure and basic civic setup for even smaller cities. A development at such a massive scale will require a joint contribution or a PPP model where private sector can play an important role. A nationwide development plan will mean that the private sector will be utilized to the core.   How do you see the demand for commercial real-estate growing in next few years? REIT as an investment vehicle has a huge opportunity in India. Currently, India has a rent-yielding office inventory to the tune of 537 million square feet valued in excess of USD 70 billion. Other properties like warehousing, retail malls, shopping centers, school buildings, etc. are potential REIT assets too. RBI's decision to allow banks to invest in REITs within the overall umbrella of 20% of their net owned funds is a huge positive. Demand for residential properties is likely to follow trend, however, CBD commercial properties are sure to attract more demand rather than peripheral developments.   What will be the impact of RERA and GST on real estate sector? RERA and GST have by far been the two biggest reforms that Indian real estate has witnessed in such short succession. A common motive of both RERA and GST is to boost buyer’s sentiment and confidence in real-estate. RERA’s effects will be visible more in the residential real-estate segment, while GST will be greatly beneficial for the commercial realty segment. Also, with the input tax credit benefit being passed onto the buyers, overall demand is expected to pick up pace by the end of the year i.e. around the festive season. We feel, the project sales will grow by 5-10 per cent annually over the next 3-5 years.   Is affordable housing possible in the NCR realty market? NCR at present is a compilation of 23 districts where only few regions such as Noida, Ghaziabad, Greater Noida, Gurgaon, Faridabad and others have been tapped for the real-estate development. Thus, land is still available in abundance and if these land parcels are offered to the developers at subsidized rates, the development cost will become lower making the projects much affordable for home buyers. With government actively incentivizing the affordable housing segment, more developers are now entering into this residential segment as it promises a long term demand.   What are the future plans and upcoming projects? TDI developments are largely concentrated in Delhi NCR area with 89% of the total projects in prime localities like Connaught Place, Patel Nagar, Karol Bagh, Lajpat Nagar, Rajouri Garden, Saket, Jasola, Gurgaon and NOIDA, while the rest of the 11% completed projects are in UP. The prime motive of TDI Infratech right now is to maintain the timely delivery of projects that are in advanced stages of completion. Till then, no new launches have been planned for near future.