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00:00We're joined by Anuj Puri, who's the chairman at Anurag Group, who joins us now.
00:05Welcome to the show, Mr. Puri.
00:07You know, my first question to you would be that, you know, given the kind of bull run the entire residential space has had over the past two years,
00:14that is kind of tapering now, you know, absorption rates have gone down by 11%.
00:20So, you know, your expectation in terms of how real estate will play out in the next few quarters,
00:26how do you think the entire real estate space will move towards to?
00:31Thank you very much and very good morning to you as well.
00:34It is true is that the quarter Q2 of this financial year has shown 11% drop in terms of the sales or, as you said, is absorption.
00:47I think there are three or four reasons for that is, you know, one was the monsoons were very heavy.
00:52You know, Shraddh were in this quarter and there was a bit of an overhang of the elections that were coming in.
01:00We are hoping that this quarter now that we've set up from October to December is a much better quarter in terms of the demand coming back.
01:11But a couple of good things also happened last quarter.
01:14One of them was that the sales continue to be more than the new launches, which meant is that the overhang of the inventory continues to go down.
01:24And the second is that the price rise started to stabilize.
01:28You know, prior to that, we had seen very aggressive price rises.
01:31The developers become more realistic and we are starting to see price rise still continuing, but it is almost coming to the inflation levels.
01:41This quarter is going to be crucial because this is a festival quarter.
01:44You know, this usually in the past we have seen Diwali, Dussehra, you know, Christmas, New Year usually is a very strong quarter.
01:52So we are hoping that, you know, there will be a bounce back that we will see from the drop that has been experienced last quarter.
02:00Hi, Mr. Puri, Anushi joining in here.
02:02I want to understand more on the price hikes that you've mentioned about a double digit growth that we've seen and Hyderabad has recorded a 32% of a jump itself.
02:10So with this kind of price hikes that we are seeing across the top seven cities, what would that lay an effect on the launches that we are seeing at and also on the inventories?
02:21I want to understand the threefold effect on the inventory levels, on the launches and the price increases.
02:25When can we expect these price increases to go on as well?
02:29So I'll explain that.
02:31And it's a very pertinent point that you that you mentioned is, you know, the way the developers are really looking at it is the price rise is, you know, in line with the inflation rate.
02:43But the moment the financial closure happens through the sales, which means they've been able to sufficiently sell the inventory through the sale proceeds, they will be now able to complete the entire development.
02:56They start to increase the price very rapidly because they are almost home at that time, knowing that the sales will be able to cover the entire cost of construction of that particular development.
03:09So that's the way that the developers are looking until such time that they are able to cover the cost of the development.
03:16They are not very proactive on increasing the prices.
03:21Once they know that our cost of development is now fully covered through the sales price, then there is a stark increase in the price.
03:28And you would have noticed it that largely that comes in when the project is completed and there is unsold completed inventory, which is where, you know, we see this double digit percentage growth.
03:40So very, very smartly, the way developers are positioning probably five or six percent, you know, growth in the rentals per, sorry, in the sale price per annum to cover to the inflation.
03:52The moment they cross the threshold that the entire construction cost is now being covered through the sales, they increase the price very rapidly.
04:02Understood, Mr. Puri, I want to understand what's the impact of this on demand and and what are the demand factors that one needs to look out for?
04:10Because it's been so strong, right, the last couple of years. Also, there's plenty of tailwind rates likely to come off.
04:18You've seen the peak of the rate hike cycle already being captured completely.
04:24So what's the demand concern for you? Is pricing one concern? Because that's something that I hear from you right now.
04:31I think there are three or four concerns from my side, obviously, as you rightly said, is there's a lot positive going, you know, at this point in time, the way economy is going, the stock market, the job creation.
04:42I must also highlight is that this calendar year 24 will be the best ever year that India has seen as far as office leasing is concerned.
04:51There's nearly about 72 to 73 million gross leasing, I mean, which is like, you know, clearly way out of the out of the park.
05:00You know, prior to that, 2019 was the best year, which was about 55 million square feet of gross leasing.
05:08That shows that the job creation in the IT sector is going on strong and this is largely the global capability centers coming into India.
05:17So rightfully, there's a lot positive. I think on the negative side, I have three or four concerns.
05:22You know, one is that because the launches have been more lackluster in comparison to the demand.
05:29I don't want this demand supply balance to really tilt in favor of the demand.
05:36That is where the developers then discover is that demand is far greater than the supply and the prices start to grow rapidly and which does then impact the sentiment and the cycle starts to then have nervousness.
05:49The second is I hope that the investor speculators do not get into the market.
05:54There are some markets where we have seen, you know, some of the speculators getting in because of the price rise.
06:00I hope that that phenomenon doesn't get penetrated across India.
06:05And the third is I do feel there is a lot of consolidation amongst the developers that have happened.
06:10I think India needs more developers. It needs more supply coming in.
06:15So those are my sort of concerns. But overall, on the demand, it continues to remain strong.
06:20All right. Mr. Puri, very in brief, I want to understand the breakup in the luxury side.
06:26We are seeing more supply coming in, whereas the affordable side, we're seeing a continuous downtick.
06:31Can you expand more on this?
06:33I think the way to look at this is that the growth in the luxury has been far steeper than what we have seen, the growth in the affordable, because the overall pie has expanded.
06:46As a result of which, the percentage of affordable housing in the overall pie has gone down.
06:52That doesn't necessarily mean that the affordable housing, you know, supply hasn't come out into the market.
06:59It only means that that supply has been slower than what we have seen in the luxury and the ultra luxury.
07:06The reason for that is that luxury, ultra luxury has been selling beautifully and the developers make a lot more profit margins on that.
07:14Hence, they have been focusing on that part because the profit margins are much higher.
07:20That's why you see is whilst affordable housing is increasing, but the percentage of growth is much lower than ultra luxury and luxury resi.
07:28Okay, plenty to look out for. This one's been a total belter in terms of how Realty has performed, especially in markets.
07:36Thank you so much, Mr. Puri, for that perspective, more of an industry perspective, but thank you for that.