MOSL: REAL ESTATE DAY-Turning toward a new paradigm

​REAL ESTATE DAY: Turning toward a new paradigm

We hosted 'Real Estate Day', which saw participation of many stakeholders from the real estate industry. We met with (a) two experts managing PE Real Estate Funds, (b) an owner of a premium real estate company and (c) CEO of one of India's largest real estate consultants, to take stock of their view about the real estate industry, the ground realty, and the impact of RERA. Key takeaways from their presentations:

• RERA is expected to determine the future of India's real estate sector. The stringent compliance norms under this act will likely result in consolidation to the extent of 30-40% in this industry. Most small players would thus find it difficult to survive, with business largely shifting in favor of organized players.
  
• The recent changes in the REIT rules are attracting investor attention; expect India's first REIT to be listed by year-end.
  
• Residential prices have been stagnant for the past 3-4 years, and the coming few years too should not see much exuberance. However, a few organized names are expected to take a significant slice of the pie due to consolidation in the sector.
  
• In metro cities, vacancies in the commercial segment at are at all-time low, which once absorbed, should lead to increase in rentals. Vacancy in commercial malls overall is high, but Grade A malls are much better placed.