Indian developers do not get any substantial benefits

Posted Sep 14, 2012 Prev    Next


Mr. J. C. Sharma, V.C. & M.D, Sobha Developers has over 25 years of experience in diversified industries such as automobiles, textiles, steel and real estate in the areas of Finance and Management. He has been associated with Sobha since June 2001 and currently bears overall responsibility for finances, land acquisition and legal functions. 


MakaanIQ got an opportunity to interact with Mr. Sharma. In this brief interaction he shares what is in store for the realty sector in the coming few years….  


1. What is your medium term (9-12 months) outlook for the real estate market in India in general and South India in particular? 

Inflationary pressures, high input costs and the challenging macro economic environment are some of the key issued faced by the real estate sector in India. In this scenario, we believe that, barring some markets, the demand in general for real estate should be better than the preceding years. 


As far as south India is concerned, owing to its higher rate of urbanisation, the market will continue to be alluring and robust. 


2. How is real estate in South India different from rest of the country specially North and West markets? 


Southern states comprise 20% of the country’s population with more than 25% contribution to the all-India GDP. Its advantages in economic and social development indices like better literacy and more and more jobs being created give it the potential to sustain accelerated demand.  


The IT sector has been a key contributor of India’s growth story. It has created millions of new jobs in southern cities. Even today, the sector employs over 10 million people directly and 25 million employees indirectly. And, most of these employees would like to settle in cities like Bangalore, Chennai, Hyderabad thus increasing the demand dynamics in the south. Even at Sobha, 40 per cent of our customer base comprises IT and ITes professionals. 


3. What is your opinion on Luxury or Public Housing? As a developer, which is more sustainable? 


If we look at the public housing model in Singapore or Hongkong, the government has provided functional homes for about 80% of the population, thus catering to the home needs of a majority of the people who can’t afford houses. And, the developers there sell houses, which cost three to four times higher than the price of the government allotted houses. 


But in India, the developers don’t get any substantial benefits. They have to bear with the increasing input costs and face delays in plan approvals. Although some players have built a business model for affordable housing at distant locations, it may not fulfil India’s burgeoning housing demand. There is a shortage of close to 30 million housing units in our country today. 


With the limited capital that developers have, they built houses that target the middle and upper middle class population, which has easy access to loans. This way, they aim towards sustainable development. 


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