Nila Infrastructures Limited is a progressive infrastructure company that believes in changing the paradigm of the industry by adopting innovative technologies, benchmark quality, robust engineering and uncompromising business ethics. Since its inception, Nila Infrastructures Limited has functioned with marked distinction in the infrastructure and real estate arena and has demonstrated timeless values and transparency in all spheres of business conduct. Every challenge to provide unswerving infrastructure to contribute to the growth of Gujarat and other states has been met with tenacity and unmatched dedication.
Replying to IIFL, Deep Vadodaria said, “The prices of real estate had stagnated and were not bubbling-up for last two to three years even before the demonetization.”
Describe the impact of demonetization on the real estate industry?
Demonetization is probably one of the largest exercises undertaken by any country to address the issue of black money. Definitely the real estate sector has got a shock and demonetization is highly negative for this sector. Real estate sector has been impacted and residential real estate demand has declined more where practice of cash transactions was prevalent. Developers will face serious fund crunch in the short to medium term, which will further delay ongoing projects. The impact of demonetization does appear to be getting diluted over time with availability of currency in circulation in the system reaching back to about 2/3 of that in November 2016. However, overall real estate sector will take some time; say about three to four quarters, to revive.
Do you think the price bubble in real estate industry busted after the demonetization?
The prices of real estate had stagnated and were not bubbling-up for last two to three years even before the demonetization. This is quite different from earlier years when real estate prices were only rising creating an impression of “bubble”. However, the portion of cash has since almost been worn-out; leading to correction in the prices and hence, a feeling that the “bubble” is busted.
Meanwhile, with respect to “price bubble in real estate industry”; the attitudinal mind-set to purchase the real estate to secure future generations or investing based on the “Greater Fool Theory” will still take sometime to get corrected, especially in non-metros and below class real estate markets.
Rajasthan has always been on your investment itinerary? How do you analyse the real estate market of Rajasthan which is mostly backed by tourism?
We are operating in Rajasthan mainly on EPC and EPC+PPP basis for development of civic urban infrastructure, primarily for the Government of Rajasthan. We have hardly any meaningful real estate exposure in Rajasthan. Having said that, we believe that Rajasthan is a Sunrise state and has been at the forefront of fresh investment. Especially with initiatives like Resurgent Rajasthan Partnership Summit, the state is opening-up and we are bullish about it.
Do you think government projects such as Smart Cities and Housing for All (Awas Yojna) will bring in a turn table effect on the real estate industry of India?
Absolutely Yes. The government has aptly addressed certain macroeconomic parameters recently as well as bestowed the “Infrastructure” status to “Affordable Housing” in the latest Budget. The outlook of government spending in civic urban infrastructure is absolutely positive in short, medium and long-term. Be it PM’s “Housing for All by 2022 Mission” or “Smart Cities” – the scales here are very ambitious and additionally now the Fiscal and Monetary eco-systems are also galvanised.
Hence, we will soon start experiencing the turn table effect.
Do you think US H-1B visa ban will impact the real estate market of India as IT professionals invest heavily in real estate?
Considering the status of Indo-US relations, we do not believe this seeing light of the day. There are a lot of factors that influence decision of such magnitude. Anyways, the real estate is not likely to get hurt with such measures in the long run.