Real Estate Trends And Consequences

Interactive Discussion on Real Estate

An interactive discussion titled ‘Real Estate: Trends, Issues & Consequences’ was organized by Moneylife Foundation on May 5. The session was jointly conducted by industry experts Pranay Vakil, Chairman of Knight Frank (India) Pvt Ltd, and Pankaj Kapoor, MD, Liases Foras.

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Photo by Phil Sexton

Speaker Insights

Pranay Vakil addressed the major reasons behind escalating prices, highlighting infrastructure and title insurance issues. He mentioned, “One of the major reasons why the prices are high today is infrastructure. Nobody wants to travel long distances for work. Title insurance is another major issue in this industry.”

When questioned about the recent recession, he elaborated, “Liquidity is vital. Developers realized this when sales volumes declined drastically due to the liquidity crunch. The slowdown gave customers ample choice as affordable housing came into the industry in a big way. Investors are ‘fair-weather friends’. Sell ‘ready’ products during a slowdown; contracts can be broken; healthy growth can be sustained by a gradual increase in prices; high-value transactions hyped by the media are not the ‘real’ market and the need is to innovate sales strategy.”

Pankaj Kapoor raised concerns about potential asset bubbles and affordable housing issues. He stated, “Are we heading towards another asset bubble? Are the prices affordable? What is wrong with the valuation and where is affordable housing? The government is responsible for hiking prices. We need a regulator for this industry to grow and curb wrong practices.”

Workshop Highlights

The workshop saw enthusiastic participation from investors, research analysts, and industry experts, leading to a healthy exchange of ideas.

Kavita Hurry, CEO, ING Vysya Mutual Fund, asked the speakers to highlight three major issues in the sector.

Pranay Vakil responded, “Three most important things we need in real-estate as a priority are—rental housing, all over the world there is organized rental housing. Here you are left at the mercy of the broker who does not know anything. Secondly, infrastructure—the government cannot be a provider, it can be a facilitator. Thirdly, all these need funds, so get foreign parties excited about India.”

Pankaj Kapoor suggested, “We need to address the congestion issue in the island city. If we move five buildings from the island city to Bandra, there will be a whole shift in the crowd. If we can shift Mantralaya, BSE, or the Income-Tax office, there will be a difference. There are three-four magnets which draw the crowd there. Everyone knows about it but there is no intention to do that because they are sitting in luxurious places. We need to add more connectivity. We need a complete master plan for Mumbai to reduce the congestion. We need a regulator, and urban planning.”

Audience Consensus

Other industry experts also voiced their opinions. The audience reached a consensus that there is an immediate need for a citizen action forum to make higher authorities listen.