Track2Realty Exclusive: Kruti Jain, Director, Kumar Urban Development, believes any funding available in real estate is gap funding. It is not about only the gap which is there in funding for real estate because what happens for other industries is that they have this reserve capital which is not their land or raw material, but is the actual capital they put in to manufacture xyz product and then they replenish the funds with whatever returns are accrued.
Pranay Vakil: No but the same developer used to rent out commercial office space, but he won’t rent out the residence because of the return. So, according to Gaurav funding is the issue and according to Atul return on investment is the issue.
Gaurav Gupta: I think you will have to take into account the historical background of real estate industry. All of us know historically real estate was never a professional industry in the country before FDI came in 2005. The industry was really fragmented and the industry was with small developers and it was more like a family business.
Jhumur Ghosh: I am a little curious. In 2008, all the funds of the world were lining up for real estate and signing and today we are having this discussion, in just four years. How does that happen?
I would like to ask the developer friends here when they say there is an ambiguity as far as ECB is concerned. Which are the funding routes that you find without ambiguity—whether it is private equity, QIP, IPO or any other route to raise money?
Gaurav Gupta: I would say there are multiple challenges for the sector.
Track2Realty Exclusive: A festive spirit only adds to the buyers’ sentiments in the property market. It can not be catalyst to new sales if the sentiment in general is low, as has been evident in the property market of Mumbai in the last 3-4 years due to general slowdown and other macroeconomic subdued indicators. However, if the sentiments are bullish a festive season can turn out to be catalyst to market revival as well. That is very much expected in the Mumbai property market this time around, thanks to the change in the overall outlook.
Track2Realty Exclusive: Gudi Padwa is considered to be an auspicious occasion as it marks the new beginning of the Hindu New year and brings new hopes to every body’s life. People traditionally make important decisions and investments on this day. They believe in luck and prosperity and prefer buying homes during Gudi Padwa. During this period, usually developers come up with new launches, special schemes and discounts. Mumbai property market always looks forward to bright days on this auspicious festival.
Pranay Vakil: As a developer if someone wants to come and tell you Atul that instead of borrowing at 11.5 per cent or 12 per cent, whatever the rate lender gives you, you will get this money at 3 per cent, how do you react?
Ravi Sinha: But if we go by that yardstick, my question is that in the major real estate markets across India do we have that kind of projects where ECB would be viable?
Ravi Sinha: Even in the Indian context, if you look at the places like Gurgaon. Had there been no infrastructure no one would be living over there and that is how NCR has evolved as a case study in satellite towns. But the disconnect is with the funding.