Increasing Land Supply is the Key to Reducing Real Estate Prices

Mumbai, Maharashtra, India, Friday, June 22, 2007 -- (Business Wire India) -- Increasing the supply of land - which constitutes about 50% of the total project cost at present and is largely responsible for high prices - holds the key to affordable housing. This was the consensus that emerged today at 'Realty 2007', the Real Estate Conference organized by Confederation of Indian Industry. Advocate Anil Harish, D M Harish & Co felt that the emphasis should be on creation of new areas with infrastructure and facilities rather than further developing existing urban areas while K Srinivas, Managing Director, Gujarat Urban Development Co. Ltd., highlighted the fact that close to 50% of 'close to urban' areas can be urbanized but are not put to urban use. Dharmesh Jain, Chairman & Managing Director, Nirmal Group of Companies emphasized that until supply increases, the concept of reducing prices will remain just a mirage. Until one flat is chased by ten buyers this problem will remain, he said. Similarly Sunil Rohokale, General Manager - Head Mortgages and Real Estate, ICICI Bank Ltd., explained that demand is always outstripping supply in the mortgage industry with too many people chasing the same asset. Parag Munot, Executive Director, Kalpataru Properties Pvt Ltd., pointed out that while demand has gone up real estate supply and infrastructure have not improved. Ashish Raheja, Managing Director, K Raheja Universal Pvt Ltd., said that while the current pricing will not come down, affordability is an issue. Sunil Mantri, Chairman, Mantri Group, opined that the current slackness in the market would disappear after September with the Dussera-Diwali period commencing whereas Harshavardhan Neotia, Director, Bengal Ambuja Housing Development Ltd., pointed out that very few developers find low income and middle income housing viable in the present scenario. The government needs to let developer's access land at cheaper prices, he said. Ramesh Jogani, Chief Executive Officer & MD, Indiareit Fund Advisors Pvt Ltd., stressed that affordability and banks introducing liquidity in the system were the major issues at present. The government needs to promote large format schemes with a specified time period. Anuj Puri Conference Chairman & Chairman and Country Head, Jones Lang LaSalle Meghraj, said that while the unchecked speculation in North India has resulted in a price correction, other parts of the country have not witnessed a change in prices as yet. Ness Wadia, Jt Managing Director, The Bombay Dyeing & Mfg Co Ltd, highlighted the soaring land prices in metros like Mumbai. He stressed that there is a huge issue of speculation and customers need to feel that they have a good deal. Pawan Malhotra, Managing Director & CEO, Mahindra Gesco Developers, pointed out that building office spaces for small industries offers a great opportunity to developers. Lalit Kumar K Jain, Chairman, Kumar Builders opined that speculative development in commercial spaces is very low, primarily for incubation spaces so there is no risk on the supply side. Satish Magar, Chairman & MD, Magarpatta Township Development & Construction pointed out that no developer is going to build offices and wait for customers to come. R N Bhaskar, Chairman & Managing Director, e-convergence Technologies Ltd, underlined the need to build for the future whereas R K Agarwal, GM-Corporate Real Estate, Hindustan Lever Limited, emphasized that infrastructure has to be in place before corporates take up office space. Capt K Srinivas, Vice President Procurement & RESO, Mphasis, said that it was useful for corporates to have information about the demand and supply for real estate as they needed to consider issues like scalability in future. Providing an Indian perspective on easing norms for FDI in Real Estate, Niranjan Hiranandani, Managing Director, Hiranandani Group of Companies, said that the secret of reducing prices is to create surpluses and that is only possible if restraints on FDI are removed, while Shobhit Agarwal, President Capital Markets & Investment Sales, Jones Lang LaSalle Meghraj, explained the original objectives behind easing FDI. Manish Chokhani, Director & CEO, Enam Securities Pvt. Ltd., pointed out that the issue is really about liquidity and access to capital, followed by regulation. Alex Hayim, Director, REIT Property Management Pvt Ltd. stressed that clarity on FDI - what can be done and what not - is the need of the hour. B S Nagesh, Managing Director, Shoppers' Stop pointed out that when money comes in, it has to bring in quality. Unfortunately we haven't seen that happen yet, he said. Ajoy Veer Kapoor, Managing Director, Saffron Advisors, explained that economics, financial inputs and politics cannot be segregated, we have to be realistic. Tarun Joshi, Chief Executive Officer, Brand House Retails Ltd and Shailesh Chaturvedi, Chief Executive Officer, Tommy Hilfiger Apparel India also addressed the conference.

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