Prestige Estate Says Real Estate Sector Needs To Do More Than Just Chasing Growth
Real estate firms need to see how delivery happens first instead of chasing the next and the next project, says Irfan Razack.
Over the next four quarters, India’s real estate sector should focus on consolidation and delivering on commitments instead of chasing growth, according to Prestige Estate Projects Ltd.’s Irfan Razack, amid a liquidity crunch in the industry.
“I believe in any business what really does happen is there are phases that go on. This is one phase where everybody needs to look at consolidating their services. They need to see how delivery happens first instead of chasing the next and the next project,” the chairman and managing director at the property developer told BloombergQuint in an interview.
“If you look at the overall atmosphere, there is a whole lot of talk and a little stress,” he said, referring to the continued headwinds faced by the sector.
Non-bank lenders, the biggest source of cash for real estate companies, have been facing a credit crunch as borrowing costs rose after the surprise payment defaults at infrastructure conglomerate IL&FS. This came at a time the sector was reeling under the twin blows of demonetisation and implementation of the Real Estate (Regulation and Development) Act, 2016.
According to Razack, this “phase” is good for the real estate sector as “money supply is restricted to connections that come from customers and a little bit of supplement from banks”. The rest depends on how efficiently a company conducts its business, collects its dues and meets deliveries, he said.
“If they do that and construction does go on, banks do look at it objectively. They will of course not put in money where they feel there’s a risk, but if they see there’s a genuine funding gap and this needs to be supported, there is money in the system,” he said.
Prestige Estate is performing well, Razack said, adding that the new launches have been met with excellent response.
Watch the full interview here: