Pranab Datta, Vice Chairman & Managing Director, Knight Frank India, is a Chartered Accountant with around 37 years of multi-functional experience covering areas such as finance, sales, marketing, corporate planning and general management.In his career spanning over nearly 4 decades, including at top levels of management, he has gathered rich and rewarding experience encompassing various industries such as engineering, consumer durables, consumer and professional electronics, fast moving consumer goods and real estate.Prior to Knight Frank, Datta was the Managing Director and Chief Executive Officer of Mahindra Gesco Developers Ltd., the flagship company of the Infrastructure Sector of the Mahindra Group, a very diversified and one of the largest and most respected business houses of India.He has been a Director with Knight Frank (I) Pvt. Ltd. since 2004, first as a non-executive director and since April 2007 in the current position.
Knight Frank India started in 1995 as a joint venture with renowned Indian promoters. iT is the leading independent global property consultancy. In 2007, Knight Frank India decided to consolidate and streamline its working to become a fully owned subsidiary of Knight Frank LLP. The company has presence across 7 principal metros across the country with strength of over 800 employees. It provides a comprehensive range of real estate related services covering residential, commercial, land, investments, hospitality & leisure, valuation, advisory services, facilities management and project management. Knight Frank delivers highest standards of quality and integrity in global property transactional, executive and advisory services. It has also delivered more than 3000 valuation reports, over 1500 consultancy assignments and manages over 12 million sq. ft. of commercial, retail and residential property in India.
Replying to Yash Ved of IIFL, Pranab Datta says, "The rates are likely to witness an upward trend from the third quarter of this calendar year with rising office space absorption."
How do you see commercial and real estate demand in the coming quarters? What is the outlook of the real estate industry?
The demand for residential real estate may pick up in the short term as people would try to avoid the service tax on under construction property, which will be applicable according to the budget. The demand for ready possession property has increased because of this impending service tax implication.
In terms of commercial real estate, the demand will be better this year. IT/ITES sector, the largest contributor to the office space demand in major cities, will recruit an estimated 1,00,000 people. In the retail real estate segment, the anchor tenants are coming forward to block prime spaces in the upcoming Mall projects. The lower rentals and accommodative approach of the developers have improved the situation for the retailers. These developments indicate that the industry will witness improved fortune by Q3 of CY2010.
What is your focus area going forward and also about your plans for India?
The year 2010 should witness a continued and concerted focus on affordable housing. Prompted by declining premium segment demand during the realty slump, major players have demonstrated their eagerness to tap into the affordable segment. The affordable housing initiative is backed by the profile of residential transactions witnessed across India during 2009. For example, of the 8 mn.sq.ft. of residential space sold across India by leading developer Unitech during the first 6 months of 2009, 40% was accounted for by apartments priced below Rs.30 Lakh and comprising primarily 2 and 3 BHK units. Further, of the approximately 140,000 units of residential space that will crop up across 7 major cities in India during 2010, a significant chunk will be accounted for by 2 and 3 BHK units, indicating a shift by developers to smaller unit sizes.
Brief us about your view on real estate regulator?
The real estate sector is extremely regulated and the process of obtaining approval from 15-20 authorities is really cumbersome. Hence, what is required is not another regulator, but a ‘unified’ regulator for the sector. The final aim of setting up a regulator should be to eventually make it a single point contact for securing permissions relating to the project. While the private entities will be regulated by this regulator, government authorities involved in providing sanctions should also be brought under the purview, so that there is accountability of every stakeholder involved in the process.
Your view on affordable housing?
There is no doubt about the impact that affordable housing can have on the real estate industry and the economy as a whole. However, we haven’t seen much progress on this front. While we had estimated a need for about 2.06 mn houses in this category, not many projects can be termed affordable in true sense. Building small units and terming them as affordable is imprudent. Contrary to the belief when building luxury projects, the affordable housing project calls for a different mindset. Deviation from the timeline of executing these projects can be a costly affair and therefore has to be a held sacrosanct so that there is a check on prices. Similarly, developers should focus on the functionality of the project rather than the cosmetics, which add to the cost without enhancing the value for the target consumer.
How do you see rates in India and globally? What price scenario do you see for the coming fiscal?
The excess supply in the commercial property segment will keep a check on the prices. In the short term, the prices should remain stagnant. However, the entry level manpower hiring in the IT/ITES and the BFSI sector will translate in to office space demand in the next fiscal. The rates are likely to witness an upward trend from the third quarter of this calendar year with rising office space absorption. The residential segment may witness a price rise in the range of 4-6% in the near term because of the budget proposals on service tax and excise duty.
However, the residential property price has seen a sharp increase in the last 2-3 quarters and the home loan interest rate is also expected to increase from here. This will limit any further price appreciation in the segment. Globally, the economies of US and UK have witnessed a growth in their GDP numbers indicating recovery from the global financial crisis and the decline in property prices have come to a halt. Moreover, recently there has been a meaningful demand for property in Singapore, London and Hong Kong markets.
How do you see House Price Index globally?
The house price index in the United States witnessed a decline of about 3% during 2009. Whereas, the house price index in UK saw a 3.4% increase. The Hong Kong and Chinese market witnessed a strong appreciation of about 27% and 25% respectively. With the recovery in the economies of Europe and America, the year 2010 should be promising for the housing market as well.