Boom in the property market is not over-

By Vipin Agnihotri

In case if you believe the lay expert, the boom in the property market is over and the market is headed for a correction. On the other hand, if you are interested in the real picture, forget the lay expert and follow what business captains running more conventional corporate houses are planning.

It has come into the notice of The India Street that Godrej, Mahindra, Wadias of Bombay dyeing, Piramals, even the Birlas, all blue-blooded scions of business, are making a beeline for the property sector with aggressive plans.

The main reason behind this is that at the present juncture real estate in India is an Rs 300,00 crore per annum business, which is growing at a 20 percent per annum. “What is helping these corporates is the fact that a plenty of them have big land banks in cities like Mumbai,” pointed out Munaf Sarif, real estate expert.

The point to be noted here is that these lands were once acquired for industrial purposes. With industries closing down or moving out of Mumbai there is no surprise that lands are being diverted to construction of residential, commercial and retail spaces.

Theoretically speaking, for the homebuyer, there could not have been better news. There is no doubt that entry of such corporates will go a long way towards upgrading the quality of housing, better after-sales service and innovative routines in financing, besides quicker construction thanks to the project management skills of this companies.

If one adds FDI to this mix, you will get a better quality and transparency all around. The main focus of big corporate houses is on township projects of millions sq ft, which would involve developing large tracts outside the city. The bulging middle class will be the market for these townships. Redeveloping tenant properties will also be big business for corporates.

In my opinion, the financial strength, the brand image and reputation of the developer, experience in developing big scale projects, ability to bring international standards in amenities and services are some of the perquisites to being long-term players.

“Financial strength is pivotal to ride the cyclical nature of the business, besides the ability create solutions for clients,” pointed out Azim Vilas, Business journalist based at India. It is worth mentioning in this regard that corporates committed to real estate bring in a plenty of credibility. Corporates are sound financially, have market access and more importantly their approach is professional.

The entry of large corporate majors will provide the much needed depth and liquidity to the market. It would enhance stability and the heightened competition will help the end consumer by providing rationalization in real estate prices. Fact remains that real estate is not a six-month or a one-year cycle, corporates and FDI funds are looking at a much longer term while investing in development projects. They are looking at a cycle of three to five to seven years.