Conversation
A sure solution to tackle realty problem
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The urban real estate market could do well with some synergy
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Suresh Jain
On the one hand, there are enormous amounts of a resource. The other has the skills to utilise the resource. Looks like both could do well with some synergy. The urban real estate market is actually suffering from a similar problem, feels Mr Suresh Jain, Managing Director, Vijayshanthi Builders, Chennai. The idea is fairly simple. Housing development can benefit from the PPP (private-public partnership) model.
“By bringing to use Government land and have private builders construct, pricing of the units will be reasonable. The same idea can be followed for re-developing Housing Board properties and Slum Clearance Board buildings, the way it has been done in Maharashtra and West Bengal,” Mr Jain told Property Plus in a recent interview. For starters, who still haven’t been able to snatch the beauty of the solution, he explains that the major reasons (for success) will be there is no revenue expense for the Government in this arrangement and vacant and encroached land can be put to better use. Read on…
Excerpts of the interview.
How can the stakeholders solve the urban real estate problem?
One way of bringing sanity into the urban real estate market will be to adopt the PPP (private-public partnership) model for housing development, by bringing to use Government land (poromboke) and have private builders construct, and also pricing the units reasonably. The same idea can be followed for re-developing Housing Board properties and Slum Clearance Board buildings, the way it has been done in Maharashtra and West Bengal.
Do you think the PPP model can be successful in creating housing capacity?
PPP model could certainly be an ideal way. The major reasons being that there is no revenue expense for the government in this arrangement and vacant and encroached land can be put to better use. This will help in keeping a check on the prices due to the increase in supply and also fulfil the government’s dream of providing housing to everyone.
Is there a crunch for affordable commercial space?
With the economy opening, and great growth in business from domestic enterprises and many MNCs looking at India for tremendous opportunity, there is a great demand for commercial space.
Hence, there is a crunch. The Government should plan to earmark big pockets of land on the outskirts and provide them with adequate infrastructure whereby more commercial, shopping complex and buildings could be developed. This will generate job opportunity and growth in the respective areas, while also easing the traffic congestion in the city.
Can you tell us about how costs have been behaving in the realty industry in recent times?
Along with the growth of the economy there has been an increase in the cost of land and other input costs. As a result of restriction on available space within city limits, land developers are forced to move to the outskirts for sourcing large spaces. But the booming economy has also increased the disposable income and raised the spending capacity of individuals; people are therefore able to afford higher prices for homes. However, if better infrastructure support is provided in the suburban areas then the development in those spaces can be increased substantially and the costs can also be kept in check since the supply would increase.
Are we currently seeing a correction in real estate?
There is no correction in the real estate segment. Wait-and-watch situation is currently prevailing, as the interest rates are upped to curb inflation.
It is ideal to buy a house now. Oil prices are rising, and there is going to be an increase in construction cost. So, the prices will go up in the industry.
You have been in Chennai real estate for almost three decades. What according to you have been the most significant housing trends that the city has seen during this time?
The last three decades have seen a change in trend of people looking for homes. They are now more into 3-bedroom lifestyle homes which go up to 5,000 square feet with all amenities under one roof instead of an independent house with 1 or 2 bedrooms. As the lifestyle has changed, and with the world becoming small as a global village and more exposure to other developed countries and salaries going up, people all over the country want a luxury life style. This trend is more visible in all metropolitan cities.
Where are new jobs being created in Chennai? And where are these workers finding their residences? More importantly, are these residences affordable, be it to own or rent?
New jobs are on at NH4, GST Road, and OMR where new industries and software companies are coming up. People prefer to stay close to their work places that have the infrastructure like school, colleges, shopping mall, road and air connectivity. Notably, the new development is in affordable limits and they can own a bigger place at a lesser cost.
Are we seeing the gradual disappearance of one CBD?
Yes, with the city and suburbs developing every pocket has its own shopping complex making it easier for the people to go around; and as life becomes busy everyone wants things in the surrounding area rather than head to the CBD (central business district).
Tell us about Vijayshanthi Builders’ plans.
We are aiming to become a Rs 1,000 crore enterprise by 2010. The Company has also acquired land measuring 35 acres near Matheran near Mumbai (Neeral) and we are looking at other expansion options. We would shortly be diversifying into other areas such as hospitality and education.
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D.MURALI KUMAR SHANKAR ROY
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