The Nifty Realty index, which represents the listed real estate players in the market, is underperforming post the last RBI policy. Even factors such as higher-than-expected inflation data and expectations of a further rate hike are adding more pressure on the sector. Pavitra Shankar, MD of Brigade Enterprises, a prominent real estate developer in India, believes that affordability will play a crucial role in seeing traction in metro markets going forward.
According to Shankar, Bengaluru, Chennai, and Hyderabad are more affordable compared to Mumbai and NCR and there is a very good demand in the mid and upper-mid segment. Moreover, the affordable and mid-segment kind of price range is seeing traction.
"Depending on which market you play, Bangalore is the mainstay for us Bangalore, Chennai and Hyderabad, these markets are much more affordable compared to say, Mumbai or NCR, so we still see a lot of traction,"
Furthermore, Shankar believes that there will be a shift towards an end-user market for super luxury housing, as opposed to investors looking for capital gains. Currently, very few companies have exposure to the super luxury segment, and Shankar's company sees good demand in the mid to upper-mid segments.
In fact, 80 percent of Brigade Enterprises' portfolio is between the 80 lakh to a crore segment, and they also see good demand in the below 60 lakh range.
“Our portfolio is heavily you know, 80 percent between the Rs 60 to 1.2 crore range. This for Bangalore is what you would call a mid to upper mid-segment. Below the Rs 60 lakh range, there is still a lot of good demand, but the pricing is maybe between Rs 45 and 60 lakhs," she said.
Interestingly, Shankar's company does not have exposure to the affordable housing segment as defined by the government, but they do have 5-7 percent of inventory in the above Rs 1.5 crore range.
Moreover, Shankar revealed that they are working on one or two projects that will be launched in the super luxury segment.
Additionally, they expect to see more launches coming from Chennai in the next 3-4 quarters.
She added, “Going forward also we will see a lot of launches coming in from Chennai but towards the end of the next financial year. We have done a substantial amount of land acquisition in Chennai over the past financial year. So by the time the designs and approvals come in, we will see that coming into our launch pipeline, but it would take about three to four quarters for that to come in.”
However, she also mentioned that there has been a shift in consumer behaviour post-COVID, and it remains to be seen how this will affect the market in the long run.