Prices Have Still Not Come Down To Realistic Levels

Updated: May 25 2002, 05:30am hrs
You would think Anshuman Magazine, managing director of CB Richard Ellis, South Asia region, is busy with only real estate consulting activities. No, today his role even extends that of advising the government on the disinvestment of government-owned hotels. Mr Magazine was instrumental in setting up CB Richard Ellis operations in India in 1994 as head of Corporate Real Estate Division for South East Asia region. Since then, he has advised various state governments and urban development authorities, assisting them in utilisation of non-performing real estate areas and optimal development strategies for projects such as city centre developments, townships and IT parks along with providing consulting in retail and entertainment, insurance and infotech.

Prior to joining CB Richard Ellis, Mr Magazine was with HEG Limited and was handling the international marketing division. With a Masters degree in Business Administration from London he has executed several projects for multinational companies for setting up offices in India with suitable infrastructural facilities. In an exclusive interview with Sangeeta Singh of The Financial Express he talks about what his takes are for the real estate sector. Excerpts:

How do you think that the Indian real estate market shaping up Do you see a revival in the coming few months
Things have slowly started looking up in the last few months. The slowdown in the economy in the last 2-3 years have had a major impact in the real estate market. Low income levels forced multinational corporations to postpone their investments in office space and go slow on their infrastructural development. The government also made no major investments in infrastructural projects. As a result in 1999-2000, the real estate market was at a standstill. But now activities are happening especially in the hotels and infrastructure sectors.

So, do you think prices in the real estate market have come down to realistic levels
No, I would still not say that prices have come down to realistic levels. As long as they dont match with inflation levels real estate prices tend to remain high and that is what is happening in India. In most western countries, housing is very affordable and is in sync with the earners disposable incomes and costs of raising these buildings. In India, real estate prices are several times more than the annual income of most people.

Do you think right investments in the real estate can really prime pump the economy

I feel investments in housing, offices, retails, railways, airports, roads, and multiplexes and IT park can raise the countrys gross domestic products by another 5 per cent. I also feel that if the government lays focus on development of urban infrastructure and social sectors substantial growth can be seen in the economy. The recent tax sops announced for multiplexes will get investors to invest in the sector which will fuel developmental activities.

In that case what are the areas that should be developed
Development will come from both investment in commercial and residential areas, suburban cities, better availability of housing finance and higher tax incentives. Development through disinvestment will also get revenue for the government which can be productively deployed in other social and economic activities. And anyway it is the tax payers money which is going into subsidising these hotels.

How is the ITDC hotels disinvestment taking shape
I would say the beginning with eight hotels is good and the government is getting not just good takers but also good deals. There is anyway no rationale behind the government being in the hotel business. Since this is the time the economy as well as the real estate market has begun to look up government should sell out maximum number of hotels in order the get the best value.

What is the pre-requisite for inviting foreign direct investment in the real estate sector
Transparency is essential if India wants to attract FDI in the real estate. It is essential to first win investors confidence for which there should be uniformity in policies and clear cut guidelines. In India since most real estate businesses form the part of the state subject it is confusing and difficult for foreign parties to set shop in different states. Plus there are stumbling block like ULCRA (urban land ceiling and regulation act), high stamp duties, varying rent control acts, property tax etc. There are also problems of poor record keeping and long registration processes.

What has been CB Richard Ellis activities like in India and what are the areas in consulting that the company has advised on
CB Richard Ellis has been facilitating investment from multinational corporates into the country and helping their expand their network. We have also worked in closed co-ordination with the public and private entities. Some of the them include the Punjab Urban Planning Development Authority, Airports Authority of India, New Town Planning and Development Authority of Anandgarh in Chandigarh.

CB Richard Ellis was the first independent international firm of real estate consultants to set up offices in India. Today, it is major player in providing strategic solutions to emerging sectors like retail and enter- tainment, hospitality and tourism, information technology and IT enabled services. The company also provides key asset services, project management, corporate real estate services.