Due to market consolidation, demand is shifting to larger players who have the ability to survive shocks like the pandemic.
We are seeing an increased demand for larger homes in the price segment of Rs 1.5 crore and above. (Representative image)
As the residential real estate segment gradually moves towards revival with consumers returning to the market, Bangalore-based Brigade Enterprises CEO (Residential), Rajendra Joshi said the company is witnessing increasing demand for houses in the luxury segment priced at more than Rs 1.5 crore. In an interview with FE’s Rishi Ranjan Kala, Joshi pointed out that many are realising the need to have their own living spaces as the Covid-19 pandemic rages on.Excerpts:
Analysts say there are gradual signs of revival in the residential segment. What are your views?
Yes, we are seeing revival of demand in the residential real estate sector, particularly in cities like Bangalore and Chennai. Our sales volumes are back to the pre-Covid levels.
Industry watchers have been pointing towards a revival in luxury housing (Rs 1.5-Rs 5 crore). How do you analyse the scenario in this space?
Yes. We are seeing an increased demand for larger homes in the price segment of Rs 1.5 crore and above. This is largely in completed projects. In one of our projects, which has units with value upwards of Rs 2 crore, we have seen a huge uptick. The customers are typically upgrading from a normal three-bedroom units to larger three-bedroom or larger sized units. The Covid-19 pandemic has brought to focus the need for working spaces within homes, separate rooms for parents/in-laws etc. Customers seem to think that WFH will continue in some form in the foreseeable future.
What has been the pandemic’s impact on consumer behaviour in the residential segment?
The pandemic has certainly impacted the home-buying process. We see that only those who have income certainty are in the market. We see demand for larger, more expensive homes from this segment. Those whose incomes have been impacted are moving out of the market temporarily. But also, many are realising the need for owning a home, which is driving the demand.
What impact do you see Covid-19 has had on housing prices in south India?
We do not see prices softening for the larger players. Due to market consolidation, demand is shifting to larger players who have the ability to survive shocks like the pandemic.
There have been voices in the recent past suggesting housing prices be brought down by 20% to clear unsold inventory. What do you have to say on this?
We have seen that price cuts have limited impact on moving unsold inventory. What is more important is the quality of the development, developer brand name and the location. We believe in cities like Bangalore, there is hardly any scope for a large price reduction.
Brigade has been optimistic about the future of affordable housing. How has your performance been so far in this segment?
We are not in the segment of housing below Rs 35 lakh. Our definition of affordable housing has been based on the current definition of government. We believe there is a large demand in this segment. But the government needs to support with many initiatives, including land at lower cost and lower approval costs to boost supply in this segment.