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In an interview with news18.com, Shiwang Suraj, director and co-founder of real estate firm Inframantra, shares insights on the real estate sector.
Shiwang Suraj, director and co-founder of real estate firm Inframantra.
The Indian real estate market has witnessed an impressive performance after the pandemic with sales surging across the segments. The market is slightly cooling on the back of rising prices and high interest rates. In an interview with news18.com, Shiwang Suraj, director and co-founder of real estate firm Inframantra, shared insights on the real estate sector and said the market will be determined by the Reserve Bank of India’s (RBI) stance on interest rates in December and beyond, and the economic outlook. Edited excerpts:
What is your assessment of the real estate sector in the country?
The Indian real estate market has undergone a dramatic shift in terms of homebuyers’ preferences and the kind of supply that is coming into the market post-pandemic. This is evident from the continuous rise in sales, launches and prices reaching record highs in 2022 and 2023. Infrastructure development, especially efforts to enhance mobility, have played a major role, besides other factors like real estate as a high-return asset class, rising aspirations and the depreciating rupee driving NRI demand. The rise in transparency over the past few years owing to the weeding out of non-serious players and the emergence of national-level developers with a strong legacy and financial heft to complete the project, deliver on the promises and ensure a sound financial investment by way of strong rental yield and capital appreciation has played an important role.
The NCR property market, particularly Gurugram and Noida, has done exceptionally well over the past couple of years. What, according to you, are the reasons?
The Delhi-NCR has seen an exceptional transformation over the past few years in all aspects, be it investor confidence or government policy and infrastructure intervention. The region is coming of age with all micro markets moving towards premiumisation. The return on investment from real estate has surpassed returns from all other investment tools. Demand continues to be robust even at elevated price points as is evident from the fall in property conversion time. The property boom is spread across segments with even retail and office spaces seeing renewed exuberance.
The real estate boom has been so pronounced that newer micro-markets on the periphery of Noida, Gurugram and Ghaziabad have been creating the necessary buzz and homebuyers’ interest. Property priced both between Rs 1-2 cr. and those over Rs 3 crore have seen the highest demand as is evident from the quick sell-out that we have experienced across several projects in Gurugram over the past few quarters.
The Q2 growth and inflation numbers are a cause of concern and might prompt the RBI to cut interest rates in December 2024. How do you see interest rate cuts affecting the housing market?
The RBI must initiate a rate cut as housing sales have begun to show some signs of fatigue. This may be due to the fact that the property market after attaining record highs in the past years has been stabilising. Another factor is that affordability is being hit as prices have surged exponentially. Mortgage rates also continue to be high. The recent hike in the circle rate in Gurugram will also lead to a rise in homeownership costs. The RBI and governments, both the Central and state, must look at ways to reinvigorate the housing momentum with a view to balancing the host of concerns that may domestically or globally affect India’s growth story.
What is your assessment of the year gone by and your outlook for 2025?
There has been a continuous decline in housing sales and launches in the last three quarters of 2024. The Indian General Elections verdict, though pointed to continuity albeit with a split verdict; and the ever-evolving geo-political and geo-economic tensions have played on the Indian economy which is evident from the declining GDP numbers and rising inflation. Against these odds, property prices have risen exponentially owing to not just a rise in input cost (land, labour and construction) but also demand from HNIs & NRIs and branded developers extracting premium for their brand equity.
The property market will be determined by the RBI’s stance on interest rates in December and beyond, and the economic outlook. Housing demand and property prices will continue to rise but the growth may not be as pronounced as it has been in the past years. For example, according to PropEquity, between 2019-24, the average price of new launches has risen by 88 per cent in the last five years. Developers will have to recalibrate their launch and sales strategy in 2025 if the sales and launch numbers in the last quarter of 2024 are not encouraging. The government should make changes in the affordability housing definition and some tax benefits to encourage more people to make home purchase.
