'There is a need to control input cost in real estate'
10 May 2012 6:52 AM GMT
The trend of building high-rises has begun in Delhi and NCR. Are we competent enough to tackle the high-rises?
There are two reasons for this trend to pick up. First is the marketing angle. As the project is iconic it gives maximum eyeballs to the project and thus creates interest about the developer also. Second reason is high-rises help us to tackle the space crunch that Delhi is facing. Such buildings give more open space on the ground and also provide best views from the height.
People are now comfortable living in high-rises and we are also making sure that best of structural engineers are taken on board to make living safe and comfortable for the residents. We have hired the services of structural engineers who have been instrumental in building Burj Dubai. For high-rises it is important to keep in mind the wind load also. We are keeping every aspect in mind related to the high-rises and in fact we are competitive enough to present safe and hazard-free structures.
People in India are apprehensive about fire safety in high-rises.
Here I would say that nowhere in world fire stations have ladders that can reach to the top of skyscrapers or even the half of the total height. The idea is to create fire refuges at specific heights. So people should not worry about fire safety in high-rises as all the standard procedures are adhered to.
What about the infrastructure outside the project?
High-rises put pressure on the existing infrastructure. Not only Delhi NCR but in whole of India, government needs to push up infrastructure keeping in line with the changing times and needs. It has to happen sooner or later but it does not mean that till that happens construction of high buildings has to stop.
Few years back almost all the developers said that government should increase FAR/FSI as it will help bring down the prices within the reach of common people. However, this has not happened even when we have seen FAR/FSI being increased in Noida and Gurgaon.
How can that happen when we are witnessing construction cost going up day by day? The cost of steel, cement and labour is going up. Another major hurdle in controlling the prices is the price of the land. There are so many mediators who are instrumental in making the land prices go up. There is the cement and steel cartel which decides the daily price of these products. Until these things are controlled, cost of construction cannot be controlled and common man will keep on feeling the heat. In such a scenario one probable solution would be to increase the density.
Would this mean that we will not get enough homes under Rs 20 lakh in Delhi NCR?
Until these issues are addressed, the common man has to live with the reality. China recently went through a real estate crisis where big projects are finding no takers.
Do you think this might happen in India as the prices are high and demand is for affordable housing?
For any real estate project in metro suburbs/satellite towns there are around 40-50 per cent investors during the bookings. It has been like this worldwide also. Alarming situation arises when the investor percentage goes up in projects. One trend that is threatening to disturb this percentage is the underwriting where developers give their whole project to the speculators. Investors will sell the project at high rates and with prices already at higher end, the chances of that inventory to sell becomes weak.
Developers should have procedures like Know Your Customer, which will ensure that the person coming to the project is buyer or investor. The need is to have checks in place at every step in real estate to deliver affordable homes.
Do you foresee decrease in prices or stagnation in the near future?
As cost of the construction is going up there is no likelihood of decrease in prices. Developers are not making huge margins unless they have land acquired ages ago. There is stagnation in the commercial segment purely because of the oversupply in Noida and Gurgaon.
Tell us about your latest project.
We are coming up with Raheja Aranya on Sohna Road, Gurgaon. It is a gated township in 108 acres expandable to 250 acres. As of now it has plots available in various sizes from 193 sq yd to 822 sq yd. It has connectivity through six lane Gurgaon-Sohna Expressway, which is near Delhi. The basic sale price in the project is Rs 30,000 per sq yd.
There are two reasons for this trend to pick up. First is the marketing angle. As the project is iconic it gives maximum eyeballs to the project and thus creates interest about the developer also. Second reason is high-rises help us to tackle the space crunch that Delhi is facing. Such buildings give more open space on the ground and also provide best views from the height.
People are now comfortable living in high-rises and we are also making sure that best of structural engineers are taken on board to make living safe and comfortable for the residents. We have hired the services of structural engineers who have been instrumental in building Burj Dubai. For high-rises it is important to keep in mind the wind load also. We are keeping every aspect in mind related to the high-rises and in fact we are competitive enough to present safe and hazard-free structures.
People in India are apprehensive about fire safety in high-rises.
Here I would say that nowhere in world fire stations have ladders that can reach to the top of skyscrapers or even the half of the total height. The idea is to create fire refuges at specific heights. So people should not worry about fire safety in high-rises as all the standard procedures are adhered to.
What about the infrastructure outside the project?
High-rises put pressure on the existing infrastructure. Not only Delhi NCR but in whole of India, government needs to push up infrastructure keeping in line with the changing times and needs. It has to happen sooner or later but it does not mean that till that happens construction of high buildings has to stop.
Few years back almost all the developers said that government should increase FAR/FSI as it will help bring down the prices within the reach of common people. However, this has not happened even when we have seen FAR/FSI being increased in Noida and Gurgaon.
How can that happen when we are witnessing construction cost going up day by day? The cost of steel, cement and labour is going up. Another major hurdle in controlling the prices is the price of the land. There are so many mediators who are instrumental in making the land prices go up. There is the cement and steel cartel which decides the daily price of these products. Until these things are controlled, cost of construction cannot be controlled and common man will keep on feeling the heat. In such a scenario one probable solution would be to increase the density.
Would this mean that we will not get enough homes under Rs 20 lakh in Delhi NCR?
Until these issues are addressed, the common man has to live with the reality. China recently went through a real estate crisis where big projects are finding no takers.
Do you think this might happen in India as the prices are high and demand is for affordable housing?
For any real estate project in metro suburbs/satellite towns there are around 40-50 per cent investors during the bookings. It has been like this worldwide also. Alarming situation arises when the investor percentage goes up in projects. One trend that is threatening to disturb this percentage is the underwriting where developers give their whole project to the speculators. Investors will sell the project at high rates and with prices already at higher end, the chances of that inventory to sell becomes weak.
Developers should have procedures like Know Your Customer, which will ensure that the person coming to the project is buyer or investor. The need is to have checks in place at every step in real estate to deliver affordable homes.
Do you foresee decrease in prices or stagnation in the near future?
As cost of the construction is going up there is no likelihood of decrease in prices. Developers are not making huge margins unless they have land acquired ages ago. There is stagnation in the commercial segment purely because of the oversupply in Noida and Gurgaon.
Tell us about your latest project.
We are coming up with Raheja Aranya on Sohna Road, Gurgaon. It is a gated township in 108 acres expandable to 250 acres. As of now it has plots available in various sizes from 193 sq yd to 822 sq yd. It has connectivity through six lane Gurgaon-Sohna Expressway, which is near Delhi. The basic sale price in the project is Rs 30,000 per sq yd.
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