Vijay Mirchandani, Exec Comm CREDAI National & MD, Mirchandani Group
Vijay Mirchandani,, presently Executive Committee Member- CREDAI National and EC member CREDAI (Indore) and also the Managing Director of Mirchandani Group. The group has pioneered several world class residential and commercial properties across India in Bhopal, Indore, Mumbai, Thane and Pune.
In a telephonic conversation with Sandeep Pattnaik of Gharabari.com, he divulged the vision of the group ahead and threw light on some crucial aspects pertaining to the Indian Real Estate sector.
Q.1. How do you evaluate Union Budget 2015 this time?
Ans. It is very disappointing for housing sector. Though the budget is good from Infrastructure and Industrial growth point of view, however, there is no provision for incentive towards housing especially for ‘Affordable Housing’ and EWS / LIG housing. Above all, no optimism for the real estate sector.
Q.2. Mirchandani Group of developers has projects spanning across Mumbai, Pune, Bhopal, and Indore. Which more cities you are aiming to add to your existing set of projects?
Ans. Given the overall sluggishness surrounding the sector, we are focusing on timely delivery of our existing set of projects. No intention to add more cities to our pipeline. We may think of expanding to other cities three years down-the-line.
Q. 3. Which of the verticals (among your host of projects) according to you is going to add max value to Michandani Group? Do you bank on your internal resources for executing projects or any external financial arrangements?
Ans. We aim to capitalize on large township projects. The development shall be in phases, might be in around 10 years time period. For land acquisition, we are using our internal accruals. Of course, we have arrangements with Private Equity [PE] funds, who will act as strategic investors in our large projects.
Q. 4. Niche developers are under probe from CCI for alleged one-sided clauses in favour of the companies and against the interest of consumers in the buyer agreements for sale of flats, apartments and other residential properties, along with other other anti-competitive practices. What is your remark?
Ans. Real Estate is basically a capital intensive industry. One builder can’t dictate the terms and conditions of the sector and also there is no question of cartelization among builders. Developers resorting to unfair means or anti-competitive practices are subject to be penalized by the law of the land with civil court, consumer courts are there to look into it. Also Real Estate (Regulation and Development) Bill are on the anvil to put a check on malpractices by builders.
Q. 5. Ponzy financial deposit schemes in the garb of real estate are luring people with promise for higher returns, which has defamed the sector. What is your view?
Ans. Basically there is hardly any such schemes floating in big cities, however it is more prevalent in States like Bengal, Odisha and some other states. There is little effect on big States like Maharashtra.
Q. 6. Housing Inventory has piled up across major cities of the Country, according to a Knight Frank report. Do you think, the time is ripe for right-sizing and right-pricing of the offerings by the developers?
Ans. Absolutely. Right-sizing and Right-pricing for new launches are in line. In case of existing projects the general perception that, builders are holding on to large inventories is wrong. Almost 60-70% housing inventories got sold, rest 30% are lying unsold. And also for those inventories, builders are waiting for getting the right price, as they have already sold at a cheaper rate earlier in the market. Hence, though the prices are not going up further, at the same time they are also not falling any more.
Q. 7. What are the other issues need to be taken care of to revive the realty sector?
Ans. A host of reforms are pending those needs to be taken care of; like banking reforms, lack of clarity as to the definition for affordable housing, cost of land need to be brought down, approval process or getting NOCs duration taking long time (as within the 30 days building plan approval not yet implemented in letter and spirit), besides high material cost, stamp duty, increase in ready reckoner rates eating into developers margins.