Tier 2 and 3 cities are better options than Tier 1 cities for Investment purpose says Mr Koshy Verghese, Value Designbuild Pvt Ltd
Value Designbuild Pvt. Ltd. (VDB) is a Bangalore- based company, incorporated in September 2002. VDB is engaged in property development and design-build services and providing cost-effective and international-quality project solutions using our design capabilities and successful project delivery experience. VDB is run by team of the finest professionals, with a collective experience of over 70 years in the construction industry. Makaan IQ team get to meet with the Managing Director of the company- Mr Koshy Verghese, has over 30 years of experience in the fields of real-estate development, construction and architecture. Prior to setting up VDB, Koshy had worked in various capacities for international companies like WJ Towell, Oman National Development Company, Prestige Estate Projects and Scotts India among others. Lets see what he has to say about the current Real Estate scenario.
1. What is your medium term (9-12 months) outlook for the real estate market in India in general and South India in particular?
The Real Estate market does normally improve from August/ September every year. However, last year it was very tepid. The current scenario is very poor all across India. However, Bangalore, it appears, is doing better than the other major Indian markets. In a few weeks the traditional “Ashaad” month will follow, when normally house sales are weak. Then we hope to see a thrust in the market. I am positive that the market will start to show some good signs as soon as the economy starts to gather steam.
2. How is real estate in South India different from rest of the regions in the country?
South India has traditionally been the most organized market in Real Estate. Even when there was tremendous opacity in real estate transactions South India was by and large more transparent. South India does not see price volatility like there is in the rest of the country. It has always a more organized market.
3. What is your opinion on Luxury or Public Housing? As a developer, which is more sustainable?
Luxury sits at the top of a pyramid which means that the number of people who can afford Luxury is the lowest in the basket. However, it is a discerning market and often one that is not completely ‘price sensitive’. Therefore, if the location, title and quality is good we can sell. However, the numbers we are dealing with are lower. So, it can be tricky. On the part of Public Housing , where you may be thinking of Budget housing, there is a much larger market. However, this market is price sensitive and the ability of the developer to match these prices is getting strained. Budget Housing is obviously more sustainable as the target audience is larger – however, since there is extreme price sensitivity, any increase in price can pressure the developer.
4. Having so many projects completed in Bangalore and if you can specify the cities, which of the other cities do you think home buyers should opt for a property purely from Investment purpose?
Tier 2 and 3 cities are better options than Tier 1 cities , as investments. However, these cities will not bring about immediate returns. There must be a five year waiting period. In Karnataka, the cities of Hubli, Belgaum , Bhartiya Nikoo Homes and Dharwad come to mind.
5. The number of unsold inventory is increasing in Bangalore. what could be the reason behind this? Just the soaring property prices or any other factor attributing to it?
Simple reason is soaring prices. There is no lack in demand. What the buyers face is a problem of affordability.
6. What policies you look forward to from the Government and RBI that will be a relief to home buyers across India?
Real Estate must be classified as an industry. That will give us funds at lower prices and will bring about a drop in prices for buyers. RBI can help by getting banks to ease interest rates.
7. What is the current trend in the Commercial Real Estate Market? How are developers meeting the increasing demand of the corporate sector? Which are the upcoming corporate bases?
Commercial real estate has shown good traction in many cities especially Bangalore. Many developers had slowed down commercial real estate which is now being quickened up.
8. What can the home buyer’s expect from VDB Group over next 1-2 years?
VDB is looking to develop more buildings in Bangalore, both in the suburbs and CBD area. However, we are also looking at opportunities in Tier 2 cities and have moved towards identifying lands. Our first development in Coorg will be launched by August/ September 2015.