Full Episode: What's happening in Indian Real Estate ? Paisa Vaisa Podcast ft. K Raheja Corp Homes

Summary

In this insightful discussion, Rames Ramanathan, CEO of K Raheja Corp Homes, shares his views on the real estate market, emphasizing the importance of developer reputation, project location, and customer service. He advises on buying vs. renting, highlights trends in luxury real estate, and provides tips for potential homebuyers. Ramanathan also discusses the impact of government incentives and the future outlook for residential real estate in India.

Takeaways

• 🏗️ The developer's perspective on buy vs. rent is that while it doesn't affect sales, for end-users, investing in property in growing cities like Mumbai, Bangalore, or Delhi NCR makes sense over time due to potential appreciation and inflation hedge.
• 📈 The real estate market has seen significant changes with behavioral patterns of homebuyers evolving during the pandemic, favoring homes with more space and open areas, and a shift in demand from two-bedroom to three-bedroom apartments.
• 💡 The luxury real estate segment in India has a robust demand from a small but wealthy segment of the population who seek premium living spaces and are not necessarily well catered to by the market.
• 🏢 K Corp, a real estate company, has diversified its portfolio by establishing sub-brands like Mindspace, Vivarea, Aria, and Vistas to cater to different market segments, reflecting a strategic approach to brand positioning.
• 🌐 The real estate sector has been positively impacted by government incentives, stamp duty reductions, and low-interest rates, especially during the pandemic, leading to a boom in the luxury segment.
• 🏘️ Homebuyers are now prioritizing features like home automation, community living, and safety features within complexes over extravagant individual apartment amenities.
• 📊 The Indian real estate market is currently experiencing low inventory levels, high demand, and a trend of consolidation with larger, more reputable developers gaining an advantage.
• 🛡️ For buyers, the reputation of the developer, their past delivery record, and financial strength are crucial factors to consider, especially in redevelopment projects where trust and reliability are key.
• 💼 Access to capital for both developers and homebuyers has improved significantly, reducing the need for under-the-table transactions and promoting transparency in the real estate market.
• 📚 The importance of due diligence when choosing a developer or project cannot be overstated, with RERA providing valuable information on developers' track records and project compliances.
• 🎯 The outlook for the residential real estate sector in India is optimistic, with expectations of growth in top cities and an increased focus on infrastructure development across the country.

Q & A

What is the primary factor one should consider when choosing a real estate developer for a home purchase?

The primary factor to consider is the developer's track record, including their history of delivering quality projects on time, their treatment of customers, and compliance with regulations. This information is accessible through RERA and can provide insights into the developer's reliability and reputation.

How has the COVID-19 pandemic influenced homebuyers' preferences?

The pandemic has led to an increased demand for homes with additional space, such as an extra room for a home office. There is also a preference for communities with more open spaces for walking and outdoor activities, reflecting a shift towards healthier living conditions.

What are the key differences between the pre-pandemic and post-pandemic luxury real estate market?

Post-pandemic, there is a greater demand for larger living spaces and community living with better amenities and safety features. Additionally, there is a focus on end-user demand rather than investment, leading to a healthier market without speculation.

What incentives did the Indian government introduce during the lockdown that benefited the real estate sector?

The government introduced incentives such as a reduction in stamp duty, which provided substantial savings for investors, and a low-interest-rate regime that made loans more accessible and affordable.

How has the real estate sector evolved in terms of access to capital for developers and homebuyers?

Access to capital has significantly improved with banks being more open to lending and private equity players investing heavily in India. This has reduced the need for cash transactions and increased the availability of home loans for buyers.

What advice would you give to someone considering a home purchase for end-use versus investing in real estate?

For end-users, it is recommended to invest in a property, especially in growing cities, as it serves as a hedge against inflation and can appreciate in value over time. For investors, it is crucial to consider the location, economic drivers, and infrastructure developments in the area.

What are the benefits of choosing a ready-to-move-in apartment over an under-construction project?

A ready-to-move-in apartment reduces the risk of project delays or abandonment. It also allows buyers to immediately occupy the property and avoid the uncertainty associated with under-construction projects that may take years to complete.

How does the reputation of a real estate developer impact the decision-making process for homebuyers?

A developer's reputation is a critical factor as it reflects their ability to deliver quality projects on time and adhere to customer commitments. A reputable developer is more likely to provide a better experience and a higher value property in the long run.

What is the outlook for the residential real estate market in India over the next 20 years?

The outlook is very positive, with expectations of growth driven by India's economic expansion, infrastructure development, and the increasing demand for homes in top cities and emerging tier-2 cities.

How does the trend of redevelopment in older buildings affect the real estate market?

Redevelopment trends contribute to the market by providing opportunities for vertical expansion in older, densely populated cities. It allows for modern high-rise structures to replace older buildings, meeting the growing demand for housing and improving cityscapes.

What are some of the challenges and considerations for individuals or societies considering redevelopment of their properties?

Individuals or societies should consider the reputation and financial strength of the developer, the project's viability, and the potential impact on their living conditions during the redevelopment process. It is also important to ensure that the developer can complete the project despite market fluctuations.

Outlines

00:00

🏡 The Debate Between Buying and Renting

The speaker discusses the perennial question of whether to buy or rent a property. He highlights that as a developer, the decision doesn't impact him as sales are sales, but he advises that for end-users, especially in cities like Mumbai, Bangalore, or Delhi NCR, investing in property makes sense over time. He mentions the low yields on rental properties (1.5% to 2%) and suggests that owning property can be a good hedge against inflation. The speaker also touches on the historical context of buying homes in Bombay, noting the significant cash requirements in the past and the current ease of access to capital.

05:02

📈 Shifts in Home Buying Behavior During the Pandemic

The speaker observes a change in home buying preferences during and after the COVID-19 pandemic. He notes that three-bedroom apartments are now in greater demand than two-bedroom ones, reflecting a shift towards more spacious living arrangements. The pandemic has also influenced buyers to prioritize open spaces within communities. The speaker discusses the luxury real estate market, emphasizing the inelastic demand from the top 2% of the economy and the importance of developers meeting the high expectations of discerning customers. He also mentions the impact of government incentives like stamp duty reductions and low-interest rates on the luxury housing boom.

10:02

💼 The Evolution of Real Estate Business Practices

The speaker reflects on the evolution of the real estate sector, particularly the commercial business, and the growth of Mindspace. He discusses the company's focus on creating homes and the branding strategy that includes sub-brands like Vivaria, Aria, and Vistas. The speaker also addresses the behavioral changes in home buyers during the pandemic, noting the increased demand for home offices and open spaces. He emphasizes the importance of developer reputation and the role of RERA in providing transparency and predictability in the real estate market.

15:04

🌐 The Impact of Capital Gains Tax Changes on Real Estate

The speaker discusses the recent changes in capital gains tax and their potential impact on the real estate market. He corrects the previous statement about the tax limit, clarifying that gains beyond 10 crores would be taxed, while anything within 10 crores can be reinvested without tax on long-term capital gains. He speculates that these changes might have spurred a surge in real estate investments, particularly in the luxury segment, but notes that the momentum in the market has continued despite potential concerns about a slowdown.

20:05

🏙️ The Future of Residential Real Estate and Redevelopment

The speaker provides insights into the future of the residential real estate sector, expressing optimism about the next 20 years. He predicts that the top 78 cities in India will lead real estate growth, driven by economic development and infrastructure improvements. He also touches on the trend of redevelopment in Mumbai, noting the increasing interest in vertical expansion and the government incentives that make redevelopment projects more attractive. The speaker advises societies considering redevelopment to prioritize a developer's reputation and financial strength.

25:07

📚 Recommendations and Personal Interests

In the final part of the conversation, the speaker shares his personal interests, recommending books and music. He mentions enjoying a wide range of genres, from history to fiction, and currently reading 'The Dilbert Principle' by Adam Scott. He also expresses a deep interest in Indian history and classical music, both Western and Indian, indicating a well-rounded and diverse set of hobbies and interests.

Keywords

💡Buy vs Rent

The debate between buying and renting property is a central theme in the script. Buying refers to purchasing a property for long-term ownership, while renting involves paying for temporary use of a property. The speaker suggests that buying a property is a good investment, especially in cities like Mumbai, Bangalore, or Delhi NCR, as it can serve as a hedge against inflation and potentially appreciate in value over time.

💡Yields

Yields in the context of the script refer to the returns on a capital asset, such as rental income from a property investment. The speaker mentions that rental yields are typically between 1.5% to 2%, implying that while rental income can be a steady source of revenue, the potential for high returns might be limited compared to other forms of investment.

💡End User

An end user is the final consumer of a product or service. In the script, the term is used to describe individuals who intend to live in the property they are considering to buy or rent. The speaker advises end users to invest in their own property, as it can be beneficial in the long run.

💡Real Estate Developer

A real estate developer is a person or company that builds or renovates properties for sale or lease. The script discusses the perspective of a developer, who may not have a preference between selling to a landlord or an end user, as a sale is a sale. However, the developer's reputation and the quality of their work are crucial for consumers making a decision.

💡Capital Gains Tax

Capital gains tax is a tax on the profit made from selling an asset, such as property or shares. In the script, the speaker discusses changes to capital gains tax rules, which may influence investment decisions in real estate. The tax implications can affect the attractiveness of buying property as an investment.

💡Luxury Real Estate

Luxury real estate refers to high-end properties that cater to affluent buyers. The script touches on the demand for luxury properties in India, driven by discerning customers with high aspirations and the financial means to afford premium living spaces. The luxury segment is characterized by unique preferences and a focus on community living.

💡Redevelopment

Redevelopment involves the process of renovating or rebuilding existing properties to improve their value or functionality. The script mentions that redevelopment is a significant trend, especially in older cities like Mumbai, where there is a need for modernization and vertical expansion. It also discusses the importance of choosing a reputable builder for such projects.

💡Regulatory Bodies

Regulatory bodies, such as RERA (Real Estate Regulatory Authority), are government agencies that oversee and regulate the real estate sector. The script highlights the role of RERA in bringing transparency and discipline to the industry, ensuring that developers meet compliance standards and protect consumer interests.

💡Economic Drivers

Economic drivers are factors that stimulate economic growth in a region or city. The script suggests that investing in real estate in areas with strong economic drivers, such as new infrastructure projects or economic centers, can be a wise decision as these areas are likely to experience property value appreciation.

💡Inflation Hedge

An inflation hedge is an investment made to protect against the eroding effect of inflation on the purchasing power of money. The script suggests that real estate can serve as an effective inflation hedge, as property values may increase over time, preserving or enhancing the investor's wealth.

💡Micro Markets

Micro markets refer to specific geographic areas within larger markets that exhibit unique real estate trends and investment opportunities. The script mentions that certain micro markets, such as the top 7 or 8 cities in India, are expected to be the main drivers of real estate growth due to their economic activity and infrastructure development.

Highlights

Developers view on buy vs. rent: Long-term investment in property is advisable for end users in cities like Mumbai, Bangalore, or Delhi NCR due to potential appreciation and inflation hedge.

Real estate yields are typically between 1.5% to 2%, but owning property may offer better financial sense over time.

The pandemic has changed homebuyer behavior, with increased demand for three-bedroom apartments and a preference for complexes with more open spaces.

Luxury real estate demand is driven by a discerning, well-traveled segment of the economy seeking top-tier living in India.

Government incentives like stamp duty reduction and low-interest rates have boosted the luxury real estate sector.

End-user demand in the luxury segment is healthy, with transactions closing when apartments are ready, indicating genuine demand without speculation.

Luxury homes are often sold as bare shells, allowing buyers to customize according to their preferences.

Inventory levels in real estate are at an all-time low, with high demand and new launches at a decadal high.

India's economy is growing, and real estate, which accounts for 12-13% of GDP, is expected to perform well.

Capital gains tax changes may have spurred real estate investments, but the demand momentum has continued post-change.

Developer reputation and project location are critical factors for buyers to consider, with RERA providing transparency on developer track records.

The real estate sector is experiencing consolidation, with larger, more reputable developers gaining an advantage.

Access to capital for developers and homebuyers has improved significantly, reducing the need for cash transactions.

Redevelopment is a growing trend in cities like Mumbai, with older buildings and societies opting for vertical expansion.

When choosing a developer for redevelopment, financial strength and delivery track record are paramount to ensure project completion.

Optimistic outlook for the residential sector, with top cities driving growth and infrastructure development supporting real estate demand.

Recommendations for listeners include reading a wide range of genres, with a recent interest in 'Dilbert's Principles' by Adam Scott.

Transcripts

what is the deal between buy and rent

you as a

developer it doesn't make you know any

difference to you whether a landlord

buys your house or an end user buys your

house you know because sale is a sale

but you know if let's say that you in in

your Social Circles family or friends

ask R please help me buy or rent what

would be your answer and let me tell you

an this is not the first time someone

has asked me this question yeah so

apparently when you look at it a rental

seems like a better option given the

fact that the yields on on asset on a

capital asset is between 1 and a half to

2% but at the end of the day if I'm an

end user and I intend to live in a city

like Mumbai or Bangalore or Delhi NCR I

think over a period of time it does make

sense to invest in its own property

black and white okay for the listeners

of course you know Ramesh knows what I'm

talking about but black versus white

there was a time when if you had to buy

a house in Bombay you have to Shell out

like tons of money in cash I'm hoping

that this has now changed access ACC to

Capital today is far more there are far

many more Avenues of raising Capital uh

first and foremost the banks are more

open to organize businesses and they are

more than willing to lend money they're

sitting with ton loads of money not

knowing where to deploy them and they

have fler players or fewer credible

players to actually Park them

[Music]

in ra welcome to P thank you so much for

doing this for our listeners my pleasure

to be here with you on fantastic

wonderful to be here

thank you so just what I you know the

intro that I had tell tell us about K

background projects and what I spoke

about how mindspace is part of this but

it's not part of what you represent well

absolutely I think as K Corp we've been

in the business for over five decades uh

we built most of car bandra Santa Cru uh

residential was what was our bread and

butter for many many decades but over

the years we came to realize that Corp

the commercial business has a

significant role to play and it grew

much larger in size over the years and

over a period of time we became a

significant player in that space and

today we are known by the name or the

brand name Min so that's mpace uh which

we have there and uh it's it's one of

the few rised leads that we have uh in

India today but what we also felt over

the period of time was to create a

separate Niche and a mark for what we

truly represented for many decades ago

which was creating homes for people and

and hence from that respect what we

tried to do was to create a brand called

K Rea Corp homes to primarily focus on

the residential business of uh what we

do so today we as a company are present

in four critical markets or significant

markets for us being Bombay Pune

Hyderabad and Bangalore and very clearly

what we have tried to do is to create

sub Brands which have uh a unique Nish

for itself in the market that we operate

in so we are present in terms of a

product offering varying from 70 lakh

Rupees to as much as around 35 40 crores

and under that what we've created are

unique Brands like vivaria Aria Vistas

Viva and hence we've been more trying to

promote these Brands and build around

that as I would call it as a large

umbrella brand being K Corp homes with

the sub Brands being these all to try

and position ourselves for the various

segments that we operated so you know

you're probably the best person to talk

about homes because like you just said

you cater across the segment could you

just walk our listeners through how

Behavior or behavioral patterns of home

buyers have evolved during the pandemic

because what we saw was a little bit

bizarre till 2020 before the lockdown

hit us you know the real estate industry

across and I'm talking about homes out

here was facing problems like inventory

issues stagnation in prices for a long

time and then a lot of action happened

let's just walk through all of that to

build up to where we are today so I

think a lot has happened and a lot of

things have been learned by all of us in

our individual lives through coid and I

think in a very positive way it's had a

bearing on the real estate sector as

well especially in the home buying

segment uh at a certain point in time

preo most of the developers used to be

conscious about the it size and make

homes according to the same and make

them compact what what the lockdown

taught us was the requirement for that

one extra room which is our home office

and many of us over the 20 24 month

period had to actually force ourselves

to work from home given that we couldn't

step out so I think that has really

changed the way people perceive their

living spaces whether it is within their

apartment in terms of wanting more space

or within their complex in terms of

having Open Spaces to walk around given

that there was a fear psychosis during

the early stages of lockdown of people

having to walk out we've seen that make

a tangible difference in the way people

are making their buying decisions today

and surprisingly at a certain point in

time I used to observe two-bedroom

apartments sold more than the other

category but now I observe three

bedrooms being in Greater demand than

the two bedrooms and those seem to be

moving faster so that's been a very

definite change I see in the buying

preferences of people and in terms of

living in communities that are with more

open spaces and I think that has been

the clear uh differentiator or a

distinct change in the buying

preferences of people during coid and

postco very interesting I want to talk

about luxury real estate now right

because you just mentioned 2025

CR just the number is a little bit hard

to digest but I want to talk in detail

here about two things one where is the

demand coming from and two on on average

have you seen your per square foot

realizations actually go up in this last

year that kind of shows in the broader

theme that we are seeing about Urban

consumption premium products like you

had the dlf project sell in 24 hours

like a billion dollars just boom okay

can we just talk about this a where is

this demand coming from okay and B are

you also seeing this trend so let me

tell you anupam it is you know when we

think of India as a poor country or it's

developing country I wouldn't call it a

poor country the demand for luxury and

the demand for people in that top

segment which probably may be around 2%

of the economy is humongous it's not

honestly catered to also in full and I

guess these are people who are highly

informed travel the world seen

experienced different kinds of service

levels different kinds of products but

their aspiration at the end of the day

is to come back home home is India and

wherever that they live and they want

the best for themselves and their family

uh in this country and I think that

segment is not been necessarily well

catered to even though there are many

developers you can have many many of

them but there are very few that these

customers who have the Discerning

customers if I may say who have an

Insight on what really they want and

there are few who are able to walk up to

that particular level of trust that they

have and hence if you end up seeing in

the luxury space there are very few

successful

developers so this is one aspect so

demand is I would say uh inelastic uh I

would put it in that way but in terms of

real quality of developments that are

there there are very few that can

actually cut up to that Mark and hence

once you do a good job this segment

Works extensively on Word of Mouth and

people also in this segment like to live

around friends and family so a lot of

that word of mouth helps in also ging

and creating communities where they all

want to be living in and I think that

has primarily driven the way the luxury

segment has grown over the last few

years this also comes in the back of the

sector not doing that well for many

years before the lockdown but what

changed during the lockdown were a few

incentives that the government came up

with in terms of stamp Duty reduction uh

that was a substantial saving for many

people who are investing in this space

because you imagine you're buying a 30

CR home and a 3% saving in stamp due is

90 lakh rupees so that was a serious

amount of money that one could save plus

during the lockdown Builders were also

more amenable to negotiating on prices

correct and added to that was also the

all-time low interest rate regime that

existed at that point in time we

probably have never seen a combination

of all that coming together and a lot of

finished inventory that was there which

in a way also enabled these customers to

weave off the GST that they would have

had to otherwi pay for a finished

inventory so combination of all these

factors and the desire for larger Living

Spaces had also resulted in the sudden

boom in the sector many of these people

when I take an example of Mumbai have

been living in South Bombay in

Standalone buildings families growing

desire to live in larger communities and

naturally many of those people were

upgrade customers and we've been

beneficiaries of that just as some of

the other developers across the country

have been in seeeing this upgrade

because most of these people are not

certainly first home buyers they bought

many and over and they are looking for a

lifestyle where they would like to be

living in so today what I see in the

luxury space is not investors I see a

lot of end user demand and that's

healthy because then you are seeing no

speculation and that is genuine demand

and you'll end up seeing transactions

getting closed when the apartments are

ready so that's a significant difference

yeah humor me you know I let's give our

listeners an idea of what a 2025 CR flat

is like you know because I don't think

I'll ever be able to buy it of course I

wish I can I wish our listeners also do

what are these Flats like you know how

big are they and you know do do do they

come with goldplated accessories

everywhere or what so in many instances

if I may say I think this is about

providing better spaces better plan

spaces size of rooms the dimensions of

rooms are not necessarily like the

typical ones that you see in certain

degrees when you also try and build

these kind of highrises people also

provide a lot of home automation

and more than anything it is about the

common amenities that are there within

the complex and the safety of the

building at the end of the day most of

the customers here in the segment don't

want the Builder finishes to be provided

so even if I were to put a goldplated

faucet the customer wants to put a

faucet of his desire of his liking and

so in many instances what we've noticed

is they rip off whatever the developer

provides is that right yes so many of

the apartments in that space

get sold as bare Apartments because of

the unique preferences that the customer

may have for the marble or for the floor

layout or for the fixtures that are

being actually put in the artment so

it's a very different buying process

that they look through but more

importantly as I say it's about

Community Living I mean if they see

their friends their family their circle

of friends moving in they all like to be

together it's like a flock moving

together and they would rather be in

that kind of a space rather than

anything else but one of the key things

that drives there is the common

amenities and the safety features and

the home automation features that are

there provided for within the complex

yeah okay moving back to more realistic

things let's do a quick review of the

real estate markets where you are

present okay because um anaro which also

folks have have been on PES you can

listen to their episode as for anaro

this has been one of the best years for

Real Estate okay um do you you know what

what's your view in that at one point of

time inventory used to be a big issue

with the real estate especially

residential okay and since we only

talking about res residential in this

episode can we just walk through um your

you know review of what where we are

today um how it's looking and then we'll

come to the Outlook part later so anupam

I think coid taught us and I think in

cids we saw the demand sore and I think

that momentum is continued uh postco too

so I think seem to be in good space

today inventory levels are at an

all-time low or when I mean inventory

levels as in overhang are at an all-time

low Less Than 3 years inventory on an

average as you see across the big cities

buying has been at one of the highest I

would say at a decadal high new launches

again have been at a decadal high so

these have been very good times because

you know new launches are being well

received we've seen some bumper sales

performed by some of the very credible

developers across the country we've also

been fortunate in our experience of

making new launches hugely successful

given that there is a demand and I think

that is very clearly there to say this

also augur well given the fact that you

know India Today is A3 trillion doll

economy we are looking and we seriously

seem to be on track to become a five

trillion dollar economy in another two

three years from now all that augers

well and real estate accounts for almost

12 to 13% of that GDP so when the

economy does well real estate also does

tends to do well and Indians typically

have the mentality to save I mean we are

a savings economy very similar to China

as we hear so there is a propensity to

invest in a home I mean that's the first

thing that probably you and I did when

we started working of buying our first

homes and I think that continues today

okay so there are two things here which

I don't know might be temporary drivers

of demand I we are now in May and I I

you know I if you can just help me here

with saying with whether this is Contin

or not driver number one was the change

in capital gains tax which happens from

1 April of this financial year by virtue

of which I think the number is five cres

okay that any capital gains that you

make in say selling shares at one point

of time you could just take the entire

thing invested in real estate and you

don't have to pay any capital gains on

whatever you've sold I believe the

government is now Capital at about five

crores okay so there was one Theory

during the rounds that maybe the last

week of March saw a spurt in high and

Tra state for this purpose and that

might cool down so that's the first

thing and the second thing is you know

some state governments like Maharashtra

especially have given some swops I don't

know where the what the status right now

of those benefits you know whether it is

Stam Duty or whatever was there do you

think you know that was a temporary bump

and going forward you might see a

slightly softer pace of growth or do you

think that there's something more

structural happening here so anupam on

the capital gains it's actually 10

crores what they have actually clarified

uh now so effectively any gains Beyond

10 crores would be taxed but anything

within 10 can be reinvested without any

taxes there on the capital gains on the

long-term capital gain so I think that

did spur a certain degree of closures uh

in FY 23 or by March 23 a lot of those

uh Fen sitters felt that it was probably

wise for them to go ahead and invest and

uh take the benefit of that but as much

as my apprehension was that you know

things may slow down uh we didn't see

that slow down in the month of April and

that's been interesting so the momentum

seems to have carried on may not be at a

macro level but certainly at certain

project levels I have seen that momentum

continue and I think that is my opinion

is here to

stay Supply constraints would remain

given the fact that there are so many

more launches that have come but at the

end of the day it's all about the

Builder's reputation the location of the

project what kind of infr INF structure

is coming around in those areas those

are critical drivers and I think

projects which are well placed that way

would still continue to do well which is

also evident from the way you see many

of the listed companies performances

they all have grown

significantly uh in the last two to

three years so it is effectively when I

see is also a case of demand

consolidation so you will have a

situation where some of the developers

may not do that well but some of the

established names will certainly go

ahead of the pack and that's what is

going to be the key differentiator as I

see in the way the sector is

consolidating slowly but surely it is

happening I want to now that you mention

consolidation I want to talk a little

bit more about this because it's that

you know for anyone who's been in this

industry for long enough or been in if

you've observed other Industries in

India also this whole thing of smaller

to bigger you know operators Builders or

whatever it is players getting nudged

out and the bigger Brands coming in and

you're seeing that happen so well in

Bombay for the longest time you know

maybe a couple of decades ago homes

would not sell just on the Builder's

name they would just sell because you

need a home and you buy it and you get

it wherever you want now apparently at

least as far as Bombay is come because

that's all that I that's all that I see

and you can help me with that this is

happening in other markets

also homes are going as for the

Builder's brand you know and a brand in

real estate is really something new um

that you would not have seen 10 20 30

years ago so this consolidation that's

happening let's just talk about that for

for for a bit so few things have

actually happened and I think it started

off with the way GST came into play and

along the way we also saw the setting up

of rera the real estate regulatory

Authority and the way they wanted to

bring in a certain level of discipline

into the business all these things have

made it more and more difficult for a a

Fly by Night operator to really operate

there's too much level of already it was

a highly regulated sector but beyond

that the level of compliances that is

actually required here now has gone to

another level alter together so what it

has done it has certainly brought in a

greater degree of transparency in the

way business is being done and which was

the need of the r or if I may say the

need of for that for that matter for any

sector to flourish you needed a greater

level of transparency and predictability

of doing business the regulations have

actually brought that even the

development control rules have been

greatly simplified when I say across the

country in terms of how one can look at

how development can take place I think

all these things have aured very very

well and really in a way has brought

about a shift in the way business is

being done with the result the larger

players have found it easier to scale up

and hence becoming better at doing what

they are in a replicable manner as

against a small operator who found it

easier to probably manage the approval

environment but couldn't manage the

entire value chain of construction

selling post sales delivery so on and so

forth which reputed players have

definitely got an up man black and white

okay for the listeners of course you

know rames knows what I'm talking about

but black versus white there was a time

when if you had to buy a house in Bombay

you had to Shell out like tons of money

in cash I'm hoping that this has now

changed and you know any any thoughts on

that I think a lot has changed in my

opinion uh with in the S how business

was done firstly access to Capital today

is far more there are far many more

Avenues of raising Capital uh first and

foremost the banks are more open to

organize businesses and they are more

than willing to lend money they're

sitting with ton loads of money not

knowing where to deploy them and they

have fewer players or fewer credible

players to actually Park them in that

said in addition to that Equity is also

much easily available today private

Equity players today are investing ton

loads of money in India and they see

India as their future I mean China was

the big story earlier today India is

certainly emerging from the shadows of

becoming a significant player and many

people are now looking at India more

favorably and I'm not just saying in

terms of real estate but I'm also in

terms of manufacturing so given all that

capital is no longer a constraint and

then there is capital easily available

there is no need for making any such

Arrangements further to that the

customers also whom we are dealing with

are all looking at raising Home Loans to

buy their homes it's not possible that

all of them have their own access to

Capital to buy it on full Equity basis

so when you see the overall ecosystem

whether it is supplying or access to

capital for development or a customer

who's actually looking for Capital to

buy his home that value chain is well

supported which was not probably the

case a few decades ago and I think that

has changed the way business is being

done and I think it's good for the long

run as I see it yeah okay raes now let's

get into the stuff that is you know that

directly affects our listeners let's

let's say that one of our listeners out

there wants to buy a home okay what is

your checklist of tips or you know some

things that he should look at for inner

developer that will help him to short

list um and choose projects what should

he be looking out for in the developer

in the home you know maybe top five or

top 10 things so first and foremost I

would say is the developers track record

of

delivery of product

quality of the way the developer has

treated their customers in the past and

this information anupam today is readily

and easily accessible thanks to rera all

that information is there and the beauty

of rera today especially Maharashtra

rera they very clearly called out the

black

sheep and developers are very clearly

being named and shamed who have not

necessarily honored their commitments

and that list is coming out so I would

urge all our listeners to actually look

through rera website or mahara website

sure in case they're looking for a

project in a market where they have

identified and they figured out the

ticket size is to their liking they must

visit this website and look out for more

information about the developers past

track record developers ability to

deliver projects because the entire

portfolio is like a drop down you can

pick and you can see what the developer

has done and further to that I think

with the May the social media is if we

can do a little more checks we can

certainly certainly understand how

the developers have treated their

customers and I think that in my opinion

will be the clear point where the

customers should do their homework

before they decide on buying anything

because at the end of the day service

delivery is the key differentiator in

the sector today and product necessarily

is not so because if I provide a marble

someone else also provides a marble if I

provide a world class home automation

technology same things is replicable by

anybody else but what cannot be

matched is the timeliness of delivery

the product in itself as what has gone

into the same and in terms of

compliances you know whether this

project has met with all the necessary

compliances because we don't want a

customer who's putting his hard earned

money to land up into any of the issues

which may be related to the title or may

related to the approvals that have been

obtained in not necessarily the right

way so I would say I think due diligence

on the developer is the most important

thing that one should do and fortunately

today all that information is available

at a click of a

button okay I want to understand between

developer reputation and price okay and

price is again a function of location

okay for a lot of people that becomes a

tradeoff like they'll see a house that

they really like from a really good

developer okay well that's at least 20%

more than my budget okay versus some

other you know house which is within my

budget but

either the location is not right or the

size of the house is you know somewhere

somewhere there's a compromise out there

so when you're faced with such a

situation okay and this is only for end

use by the way okay because we are not

talking about investing at all this is

somewhere that I'm going to stay for

hopefully the rest of my life how should

I you know do this tradeoff what's a

good way to look at it and approach it

so I think you know this is a situation

that we all have faced I I would also

think of early like when I looked at

this was always a tradeoff that I had to

consider but the easier way to deal with

such cases would be to buy or invest in

a ready to move in apartment from a not

so reputed developer rather than going

to an under construction project because

we keep hearing about horror stories

where developers have unable to complete

the project the project is stuck for

years on end so rather than get into

those kind of predicaments it's it's

better that a customer looks for ready

to move in apartment from The Not So

ideal developer that he may want to

invest in and probably pick it up and in

many instances what you also land up

seeing is this inventory is lying there

and the developer who's built it is also

desperate to complete and get out of the

project so you may find a customer

getting a sweet deal out of these

developers too so I would rather drisk

myself if I were in that position today

of investing but I certainly wouldn't

recommend investing in an under

construction project which is 3 years

from delivery because who knows what

happens tomorrow and I think that's the

way I would rather mitigate my risk if I

were in that position yeah so that's a

you know that's that's a golden rule

folks that between a ready to move in

versus an under construction always go

for the ready to move in because you're

getting your product there and I guess

you're also talking about rames out tell

about all the approvals that absolutely

this bit of a gray area but I'm assuming

that the home finance companies kind of

take care of us out here they wouldn't

give a loan to some something that's

kind of shady right you're quite right

Anup I think I missed that point Point

uh the fact yet remains you know today

when you are buying a ready to move an

apartment and you are taking a home loan

the home finance companies do a complete

thorough REI or a check on the title so

in a way that also endorses whether

you're buying into a product which has

the necessary approvals has the

necessary titles Associated to that so

in a way it it does what you need to

actually do your diligence on yes and of

course now you know I want to get this

out of the way because man this is a

really hot topic and I have no idea why

what is the deal between buy and red as

a

developer it doesn't make you know any

difference to you whether a landlord

buys your house or an end user buys your

house you know because sale is a sale

but you know

if let's say that you in in your Social

Circles family or friends ask R please

help me buy or rent what would be your

answer and let me tell you an this is

not the first time someone has asked me

this question so apparently when you

look at it a rental seems like a better

option given the fact that the yields on

asset on a capital asset is between 1

and a half to 2% but at the end of the

day if I'm an end user and I intend to

live in a city like Mumbai or Bangalore

or Deli NCR I think over a period of

time it does make sense to invest in its

own property I say this because probably

real estate is one of the best hedges

for inflation today when I keep my money

in the

bank the value of the money erods over a

period of time given the inflationary

Trends stock market is not where I would

recommend to put downloads of money

because honestly we really don't know

how it behaves real estate has

traditionally been a very safe asset and

given that the way the cities are

expanding how infrastructure is changing

the Dynamics of the

city you have a fairly good chance for

the asset to appreciate and I wouldn't

say this as a guarantee because you can

invest in real estate and see that the

asset is stagnant it can also happen but

if you invest wisely you see the

corridors where the growth is happening

you see the locations where economic

drivers are likely to come or happening

you see the Metros the trans Harbor

Links or a new uh economic Center

emerging in close proximity those are

clear signs for one to go after and if

you are smart you would end up seeing

that these are probably the best uh bets

to invest in and many people have made

ton loads of money in that process so I

would certainly say invest if you have

it also brings in a certain degree of

discipline and at the end of the day if

I earn 100 rupees every month and I know

that I have to put 50 rupees towards my

Emi it also brings in a discipline

systematic investment of your money even

though it may be to pay your home loan

in uh monthly installments but it

certainly brings in a certain degree of

discipline and in a way you are creating

a long-term value for yourself over a 10

15 20 year period so I would strongly

recommend buy a home sure rather than

rent okay rames one massive Trend that

we're seeing in M especially the the

western suburbs okay is

Redevelopment um I don't know whether

Kera cop homes is doing redep projects

but I get this question a lot from a lot

of people that my house is either going

for redevelopment or we as a society are

considering Redevelopment so for someone

who owns a house in a building that is

going for

redevelopment what would be your advice

to this person when they're looking at a

builder and choosing

someone because this is a very it's a

it's a sensitive thing right because

revs normally involve you know for me as

a person who's giving up his house I'm

really going into a black hole I'm

trusting a builder that he will come and

he will deliver the entire project on

time which may or may not happen of

course there's era I agree with that but

lot of things in play of course and

there is a nice big payoff for me also

because there is a corpus that I get

there is rental that I get and there's

extra area that I get so you know give

given these moving Parts what's your

advice out here well interestingly

anupam we've just about started looking

at that space I mean the last year or so

I would say we've been looking at

Redevelopment uh it's not something that

we did for a long time but many of the

societies that we developed in the past

and you're talking about Bombay or I'm

talking about Bombay sorry go on uh

we've seen many of the societies that we

developed in the past have been 40 50

years old and they now see their

families expand and the opportunity of

increased FSI also creating a Temptation

for societies to go for redevelopment so

many such cases have actually now

started coming our way where they want

to continue their association with us so

their fathers brought in and now their

children want to redevelop so saying the

older building was also a Raa proper and

now that wow we've seen those coming our

way so it's a space uh which is

interesting and Mumbai has been seeing

this Redevelopment trend for the last I

would say a couple of decades it's also

the fact given that Mumbai is is a very

old city I mean we've seen uh many parts

of Mumbai over 150 years old and the

other parts closer to 80 90 years old so

there is a trend for going vertical and

that also comes at the expense of

demolishing what is already there and

then building a modern high-rise

structure and the government has also

given a lot of and there are many

incentives too uh for such Redevelopment

to make it a win-win for the developers

and more importantly for the societies

that are going in for

redevelopment coming to the second part

of your question which was what would

what should one Society uh look for or a

resident in a society look for is

certainly the same thing as I mentioned

earlier the reputation of the Builder as

to what has been their track record of

delivery and more than anything is their

financial strength because at the end of

the day come watch me if the markets go

turtle or the markets go south if I may

use the right word would the developer

be in a position to complete the project

on time or not and for that the

developer needs to have Deep Pockets or

access to Capital to ensure that that

project is completed Come What May and I

think that is what a society should be

looking at there are developers who

would be willing to offer much sweeter

deals given the fact that in

Redevelopment The Upfront Capital

involved or invested by the developer is

insignificant as in comparison to the

value of the asset so all the more the

reason that the societies don't get

tempted by these over attractive

proposals that a developer may offer but

go for the tried and tested safety is

better here in this case yeah and you

know that's such a folks you know really

you just want to have a balance between

the What's called the commercials of the

agreement versus the reputation of the

Builder typically both might be slightly

off you know a reputed builder might not

give you the best possible um

commercials as it called like I said

corus rent and extra area but he's going

to give you a finished product that has

a certain value in at the end of the day

because I'm assuming that developers are

also approaching a redev like it's a you

know it's part of their reputation so

they're not doing this as just another

deal on which they can make profit right

I mean well absolutely I think today

what I notice is many of the developers

who have traditionally not necess been

in the Redevelopment space have started

looking at that more favorably that's

also because in a city like Mumbai land

opportunities for a brown Field Green

Field development are very limited so

one has to look at red

and a few things have also changed in

the last one year when I think of it in

the way the rules of the game have

changed for example a lot of this

project were affected by the CRZ Norms

now with the relaxation on those Norms

suddenly there is a new crop of land of

societies that have come up for

development because the project

viabilities have become more attractive

than what they were when the CRZ rules

were different so a lot of those things

have changed and I think that does make

a big difference okay wrapping up this

episode rames what's your Outlook in

General on the residential home sector

and I'm talking about first let's talk

about it generally and then about

specific microm markets micro Market

sorry which look good to you I've been

in this business for 20 years and this

20 years have been phenomenal but I

think the next 20 years is going to be

even better than the first 20 years that

I've seen and that I say this because we

are changing very

rapidly and and I spoke about briefly in

the P earlier in our conversation about

us growing into A5 trillion doll economy

I mean with that you are going to see so

much more happen uh in this space given

that everyone wants a home and I say

this not just for residential I say this

in every aspect of real estate whether

it is commercial the need for hotels the

need for malls the need for hospitals

you name it this country is going to see

it in addition to that we're going to

see significant more infrastructure

development we already are witnessing it

when we see the kind of bridges the

airports the stations the railway

stations the port connectivities I mean

this country is seeing some amazing

level of activity today and I extremely

bullish in the way the sector was emerg

uh in times to come I think the next 20

years are going to be even better than

the first 20 years that I've spent in

this

industry okay and you said that kja is

in Bangalore Puna and Bombay anything

any trends at your witnessing Bangalore

for example is in in its own Zone I

every day you know on social media

there'll be some H some some really

insane stuff about either the rentals

the latest thing I heard was some person

whose marksheet was part of a profile

that is being sent for rent and I was

like bom is much better off that way you

rent you don't get a house because you

didn't get good enough marks in

Mangalore I don't know about that anyway

that's very interesting yeah jokes apart

any Trends in the micro markets anything

that makes you you know that um that you

like to talk talk about so I would say

uh with the economic development in the

level that I am expecting it to happen

the top 78 cities in the country will be

the flag bearers of real estate growth

and I mean the top 78 being Bombay

Bangalore Delhi NCR Puna

Hyderabad Kolkata Chennai these are

clearly the fact barers that I see I

also see tier 2 cities uh emerging as

stronger centers when I would call it an

ahmdabad

jaur uh cities like lakau or kpur

baneswar there is a certain level of

activity where the states are also

promoting a certain level of investment

and that's a a very interesting Trend

you know every state government wants to

promote investment in their state

they're trying to woo overseas investors

to invest set up more employment for

people in their state so I think these

are all very good trends that I see and

with that you will see investment and

with that one would land up seeing the

desire and requirement for homes so I do

see in times to come the Demand only

going up there will be Pockets I

wouldn't say that there won't be over

Supply but this will be micro Market

specific but at a macro level The Strand

is bound to be very robust in my opinion

in times to come okay interesting and

last question my final standard question

to all our guests rames recommendations

um anything good books OT anything that

you want to recommend to our listeners

so anupa my lead all in Sury nice right

from history to palt to fiction into

non-fiction I I love reading them all I

do sometimes for Light reading read up

currently I'm reading a book on written

by Adam Scott on the Dilbert's

principles it's interestingly it's a

satire on uh corporate life and it's

quite amusing today when I've been in

the sector for 20 25 years and I see how

things uh are and how a person like Adam

Scott writes about it and portrays it

with pretty pictures it's it's light

reading I enjoy them all okay uh

anything else you want to talk talk

about maybe you know business history

anything else that you're reading that

you find interesting well I do have a

great level of interest in Indian

history I I do read up a lot and

sometimes you know you see history

repeat itself in a certain interesting

ways when I look at how India was

considered at the time of Independence

that it would the kind of problems that

we saw at the time of Independence a lot

of it seems to be repeating itself even

today but I'm sure and I'm hopeful that

things will change and a lot of it will

also depend on the level of uh awareness

that we all build towards and I think

yeah I I I I'm completely a a student of

History if I may say so I enjoy it I

listen to music right that's another

thing that I thoroughly enjoy uh playing

the instruments or listening to

classical music yeah anything you know

Western classical Indian classical any

favorite uh I think Indian classical any

day for me and Western instrumental

music I think that's something that

within that any composers or I listen to

a lot oh boy there you go folks nice

list of recommendations out there of

course the D principle by Adam Squad

Indian classical Western classical you

can listen to to them all and we are

ending on a note of optimism on our

country and I'm pretty sure that the

world is going to look at us very

differently as compared to when history

was there when we got independent folks

with that that is a wrap on this episode

OFA my guest rames ranganathan CEO okay

Raa cor homes rames thank you so much

for doing this for our

listeners