Pawan Swamy, Chairman & Jt. Managing Partner, Credberg

Housing market will take another 3 years to recover primarily due to exodus of investors, buyer sentiments at abyss, disbelief in developer’s delivery despite RERA and preference to rent v/s purchase by the millennials.

Dec 30, 2020 09:12 IST India Infoline News Service

Pawan SwamyPawan Swamy, Chairman & Jt. Managing Partner, Credberg, is a founding member of Credberg and serves as Chairman &Jt Managing Partner and is responsible for the overall direction of the firm. He has more than 20 years of experience in Indian Real estate on the investment banking and brokerage sides of the industry. He has led more than US$ 5 billion in transactions across all asset classes and the entire capital structure. Mr Swamy was previously a Managing Partner at Brookfield Financial, leading their India operations. Prior to that, he was a Managing Director at Jones Lang Lasalle where he set up one of the largest real estate capital markets and investment brokerage platforms in the country. His experience also includes working on the real estate mortgage lending side as a senior executive with Standard Chartered Bank. Mr Swamy earned an MBA in Finance from Mumbai University and earned an undergraduate degree from the Indian Institute of Management and Commerce (IIMC). He is a member RICS and serves as a board member of the Real Estate and Housing Working Committee of RICS.

In an interview with Mamta Maity, indiainfoline.com, Pawan Swamy, said, “Housing market will take another 3 years to recover primarily due to exodus of investors, buyer sentiments at the abyss, disbelief in developer’s delivery despite RERA and preference to rent v/s purchased by the millennials.”

How has been the realty sentiment in 2019?
The overall real estate market has been muted primarily because of the lack of liquidity that is available to the industry and drop in sales velocity in the residential sector.
          
Which categories have been popular?
Clearly, amongst all asset classes in real estate, the office has stayed extremely strong and has almost been decoupled from the distress that is present otherwise in the sector. Office absorption in the first half of 2019 was recorded at 25.2 mln.  sq. ft. Which is 20.4% higher than that of first-half of 2018. Absorption in full the year of 2019 is expected to cross 45 mln. sq. ft.

What is the current unsold inventory in the city? Which markets have the maximum unsold stock and why?
While interest rates are all-time low in India and salaries might not be rising but stable, the house prices haven’t increased since the last 3-4 years. Factoring inflation, house prices have softened. Data shows a decrease in Mumbai city housing sales. In the 1st quarter of 2019, the housing sales were 96% higher in comparison to the 4th quarter of 2019, across all price brands. In the 4th quarter of 2019, there was about a 20% decrease in the purchases of housing in the price range between 50L-1cr. There has been a 86% increase in purchases during the 4th quarter of 2019 especially among the price brands between 2cr - 5cr. Despite that, the housing market will take another 3 years to recover primarily due to exodus of investors, buyer sentiments at the abyss, disbelief in developer’s delivery despite RERA and preference to rent v/s purchased by the millennials. (Data source: CRE Matrix)

Was the market demand in line with the expectations? Which quarters were the best performers? What factors lead to demand?
The affordable housing segment seems to have done pretty well and the demand is there for the right kind of real estate products which are being built by the right kind of brands in the market. There is a clear distinction for the products being developed in the right price category with the right developers in the right submarket.

Any new trend that the city witnessed in 2019?
The key trends for 2019 remain that institutional capital is being deployed in the office and affordable housing sector. Also, stuck projects are not being able to attract capital due to a variety of issues. Sales volume in mid-market housing is stable and office absorption remains strong.

How the market is expected to be in 2020?
My view of the market in 2020 is that there would be similar kind of volumes at least for the first half of the year where the industry will find its way of unwinding the liquidity situation that has played over the last 18-20 months. Once that passes, I do believe that the demand will make a comeback. Price points will remain flat especially in the residential sector but volumes may go up. We also see the emergence of alternative asset classes such as student housing, co-living, and data centres.          

How is the scene regarding the distressed assets in India in 2019? How can they be mentioned? What’s the outlook for the same in 2020? Which asset class has the maximum distress currently?
The asset class that has the maximum distress in the country is residential or the township development where residential is a large part of development. In 2019, capital struggled to go towards distressed assets because the legal framework was not ideal for last-mile financing to come in. In 2020, we will see some of these issues getting addressed and the risk-reward mismatch that existed in 2019 getting addressed and therefore a fair amount of capital will move towards the distressed assets sector in 2020. We feel that in the first half of 2020 itself there will be a lot of capital deployed towards projects in the residential sector.

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