The Realty sector has been facing headwinds for the past three-four years owing to demonetisation, Real Estate Regulatory Authority (RERA), GST (Goods and Services Tax), and delays in projects. The pandemic has further aggravated the problem by impacting sales and market sentiments.
A report by Liases Foras, a non-broking real estate research firm, said that there is a revenue loss of 8.3% for each month of the lockdown. The report added that by June-end, revenue loss in the residential real estate market alone will be 26.58%, which will rise to 35.07% by July-end. According to a research paper by Savills India, the battered real estate industry could take about a year to recover.
Amid the uncertainty around the duration of the pandemic and recovery period, Sunteck Realty is optimistic about getting back to normal soon.
In an exclusive chat with The Blue Circle, Kamal Khetan, Chairman and Managing Director, Sunteck Realty, discusses the journey and projects of Sunteck, the impact of COVID on different sections of real estate, and what lies ahead.
The Strong Sunteck
Kamal Khetan is a prominent real estate icon based in Mumbai. An engineer by profession, he started Sunteck Realty in 1999. Today, he is a dominant player in the luxury real estate space and his company forms part of the top 10 listed real estate firms in India. Sunteck Realty is a research-driven realty company that has endeavoured to create landmark destinations through its differentiated brands. For each of the brand segments, Sunteck Realty has successfully identified the befitting micro-market within the Mumbai Metropolitan Region (MMR).
After successfully creating landmark uber-luxury development in Bandra Kurla Complex (BKC) Signature Island targeting MNCs, Sunteck has created a mid-segment 23-acre premium luxury project, Sunteck City in Oshiwara District Centre (ODC), Goregaon. It has also acquired 150 acres at Naigaon, to build Sunteck World – the largest aspirational luxury township of MMR’s western suburbs.
Khetan said that their projects have enhanced the prospects for sustained capital appreciation. “Our timely progress in project development has been instrumental in increasing confidence among customers to drive long term demand,” he added.
Sunteck’s strong balance sheet has played an important role in making the company one of the fastest-growing luxury developers in Mumbai. The strong presales and stringent control of cash flow with an assets-light model have helped the company tide over any unwarranted environment.
“In the current environment, we believe that companies that have negligible debt will enjoy an advantage in the eyes of all stakeholders,” pointed Khetan.
Impact on Luxury and Ultra-Luxury Properties
Sunteck is known to offer luxury properties across their brand segments such as Signature- uber luxury residences, Signia- ultra-luxury residences, Sunteck City- premium luxury residences, Sunteck World -aspirational luxury residences and Sunteck- Commercial & Retail developments.
Khetan believes that while there might be a temporary blip in the uber-luxury and ultra-luxury segment, customers of this segment generally refuse to miss out on an attractive opportunity.
He added that the increasing interest in homeownership among the new-age millennials will help the residential sector to embark on a growth trajectory. While the pandemic has kept most people indoors, the value for comfortable luxurious abodes is likely to increase.
“Luxury by virtue is timeless. Brands which create luxury for every segment, would never lose the favour of their loyal customer base. Customer interest in Sunteck properties remains unstirred and we expect sales to pick-up very soon,” said Khetan with confidence.
The Path to Recovery
The COVID-19 outbreak has thrown the realty sector’s all the plans askew. Even before the pandemic, the sector was set for a phase of consolidation. At present, several realty developers with limited access to liquidity and customer advances, are looking for partners who can grant support to complete the pending project and market it to the right audience. Meanwhile, weaker players are finding ways to access quick funds while redistributing risks.
“The recent policy relaxations are furthering this cause and making the consolidation process more conducive to all stakeholders,” said Khetan.
He reckons that the extension of the credit-linked subsidy scheme under PMAY- which offers an interest subvention on loans taken by the middle-class sections with an income of Rs 6-18 lakh, will help sustain the demand for affordable housing and create the much-needed cash flow for the developers.
Customers who were unsure of buying houses have started closing deals. As workers come back to sites and supply chains open, the operations will start in full flow. Additionally, Government assistance for the struggling projects is likely to boost customer sentiment.
“The announced measures will help the organized and established developers to gain maximum mileage and drive sales going forward,” mentioned Khetan.
How to go about in Real Estate Market
For High Net worth Individuals, the Indian realty market is becoming more favourable due to the low-interest rate, attractive price point, and appealing capital appreciation. Besides, the favourable exchange rate on the back of the sliding rupee against the dollar has improved affordability for Non-Resident Indians(NRIs).
The direct intervention of policymakers through recent reforms stimulate homebuyer’s sentiment. Above all, choosing a trusted brand of property developer known for the high quality of delivery would help mitigate the risk of value erosion anytime in the future.
Khetan emphasized on the importance of mastering the topographical and cultural profile of the market to be successful in real estate.
“Market Regulations differ from market to market and volatile market sentiments keep you on your toes,” said Khetan. “It takes years to generate viable returns for the developer, failing which one can easily spiral into deep debts,” he added.
Khetan advised young real estate entrepreneurs to set their goals clearly and focus to achieve those goals through dedication.
“Work hard to deliver the best. The world is full of great ideas, but success only comes through taking the first leap and moving quickly into an ever-changing environment,” he concluded.
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