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Rising Urbanization Offers Opportunities for Real Estate Development : CII JLL REPORT

News Mumbai, India - 23 June 2012

Real Estate Industry Needs To Speak In One Voice To Realise True Potential: CII Real Estate Conclave

Rising Urbanization Offers Opportunities for Real Estate Development : CII JLL REPORT

~ Positive government policies like giving it industry status will help real estate to contribute more to the nation’s GDP ~

~ Tier two cities poised to drive the next growth phase in the market ~

2011 was a record year for the Real Estate industry in India. In 2012 as the world tries to spring back from an economic downturn, it is time for the real estate industry in the country to ‘Conserve, Consolidate and Grow’. This was both the title and the conclusion of the Confederation of Indian Industry (CII) Real Estate Conclave 2012 held in Mumbai today.

“Construction business is the second largest employer in the nation after agriculture. It accounts for 10% of the nations GDP. Yet it has not been accorded industry status thus keeping benefits from financial institution sides, lower interest rates and easy approval processes away from us. We need to organise, talk in one voice and drive towards the common goal of growth of the industry and the nation if we have to reach our potential,” said Mr.  Firdose Vandrevala, Chairman, CII National Committee on Real Estate & Housing and Chairman & Managing Director HIRCO Developments.

Mr. Vandrevala laid out his suggestions for the nation’s growth and how real estate can play a role in it. “To keep up its growth, India need to urbanise quicker, build more cities and reduce graft and corruption because they channelize money away from productive investment,” he said.

Giving vision for the industry he said that the most critical factor for the growth of industry is human resource. This can happen only by attracting talent and when real estate becomes the sector of choice for talent. The other is to deskill job and build supply chain in construction that looks at assembling a building rather than constructing it.

Mr. Anuj Puri, Chairman & Chairman and Country Head Jones Lang LaSalle (JLL) said, “2011 was a landmark year with record construction and leasing out of spaces in both retail and office space and growth in the residential space. Absorption rate was strong and upward swing was in process. With the economic downturn 2012 became a sort of reality check and supply has been going up, but absorption has come down. The scenario is less predictable and there is a great challenge. This challenge however is also an opportunity.”

He said that it is time is to conserve, consolidate and grow individually and as an industry. According to him the need is to increase transparency to improve investor and buyer confidence, work towards easing out of regulatory framework and increasing and developing skilled manpower.

A CII JLL joint report ‘Indian Realty – Through The Looking Glass’ that highlights the key trends in office, retail and residential space in the country was also released at the conclave.

Mr Unmesh Sharma, Associate Director – Real Estate & Telecom Research Macquarie Capital Securities (I) Pvt. Ltd., said, “Real estate is losing steam not entirely because of the economic downside. The frustration is really with the slow pace of reform from the government side that is causing investor fatigue. There is very little movement from the government. From the investor’s perspective when the European Union is undergoing problems, India should have emerged as the alternate destination but it has not. The problems are in multiple fronts. Yet, that does not mean that the right opportunities cannot come through. Government policies have to be in tune to encourage the sector and inspire investment.”

In India, the tier 2 cities have become high growth sector for the real estate industry. Despite being a highly fragmented market affordability of homes has made it lucrative for customers. People have started investing in tier two cities now because the tier one cities have reached a kind of stagnation. As the peripheral infrastructure including transportation, education and employment improves in these cities, the real estate industry’s is seeing corresponding growth.

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