Is the Indian real estate sector the right place to make a serious career in now? Compared to more developed countries, the Indian real estate sector still lacks sophistication and transparency. However, it continues to be in the limelight of domestic and international investments. This has naturally brought on the need for better, more capable human resources.
Sunil Dahiya: What is happening is that we imported certain professionals from other industries and somewhere the vision and mission of the promoter was fueled by their greed or professionalism. They called it financial engineering. And that was the reason we got blocked from the IPO market. Today, whoever has filed DRHP, is going to face so much scrutiny and the band value itself will be discounted by 30%.
Sunil Dahiya: I will share a very personal experience. There was an IRS officer who was monitoring these IPOs at some level and said to me ‘Sunil you watch these IPOs, these are going to be windfall IPOs and then you will see watershed.
The demand fundamentals of the India story are now focused around all cities that have sufficient economic activity, be it industrial, service sector-driven or incentive-driven programs by the State Government. In Gujarat, which has seen considerable industrial progress, the key cities of Ahmedabad, Surat and Vadodara come readily to mind.
Hyderabad Police have arrested six persons, including director of a real estate firm, in Ongole town of Andhra Pradesh on charge of cheating people under multi-level marketing money circulation schemes suspected to be involving several crores.
Pranay Vakil: The problem is when having sanctioned the loan, there is no fear of revoking it. You can change your mind because these funds are kind of committed. When engage Shapoorji Pallonji or L&T to execute a project, you enter into a contract and you say that this is how we are going to make payments. Suddenly, if you are to switch off the tap, it is going to cause a lot of embarrassment to the developer.
Atul Modak: Why did bankers’ lobby not block the mutual funds then?
Pranay Vakil: Because the mutual funds lobby is larger than the bankers’ lobby. They could not do anything about it. The companies into mutual funds are so large, they might just foray into banking.
Sunil Dahiya: I have a copy of the circular which PNB got from the RBI and probably the managers are interpreting that in their own way. Now the circular that has been shared by the HO with the managers says that they will not take any exposure in housing loans, not even non-fund based.
It has been strangely characteristic for the real estate and construction industry in India to remain unregulated and unrecognized, even though it is one of the largest employers and contributors to national growth.
Kruti Jain: I believe 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.