Central Park is a known name in India’s real estate industry and has been a frontrunner for its boutique concepts of living. Envisioned by Mr. Amarjit Bakshi along with his younger brother, Mr. Kanwaljit Singh Bakshi almost 16 years ago, the company successfully delivered many projects. Today, it is a billion dollar plus conglomerate, with interests in Real Estate, Hospitality, Auto Components, and Infrastructure.
In a candid conversation with Mr. Amarjit Bakshi, the Founder and Managing Director of Central Park, RealtyMyths tried to understand company’s forward plans. It also tried to seek Mr. Bakshi’s opinion on RERA, GST and government’s other reformatory measures. Here are the excerpts of the interaction:
- It’s been almost 16 years that Central Park started its operations into the real estate market and chose ultra-luxury segment. However, off-late there has been a dip in the demand of luxury and ultra-luxury projects. How do you read this shift of market dynamics from luxury to affordable and premium segments?
The last few months witnessed transformational reforms being introduced in the Indian real estate sector. Progressive measures such as Real Estate Regulatory Authority (RERA) Act and Goods and Services Tax (GST) are aimed towards streamlining existing issues in the sector and reshaping its image as a positive and organized sector.
With these changes set in motion, the industry saw considerable effect in demand across all projects. However, these developments had a negligible impact on the demand for luxury housing. The consumer for the luxury class is also undergoing changes with luxury getting trickled down to middle-class buyers. The primary growth driver for this shift is generation next consumers who are educated, tech-savvy, well-traveled and have disposable income at hand. Their ambition to achieve high living standards and better pay-packages combined with the ease of getting home finance is driving the demand for luxury amenities in real-estate.
According to Global Wealth Report by Knight Frank, India will add about 1000 ultra-high net worth individuals (UHNIs) each year for the next ten years. With the Luxury Real Estate growing at a CAGR of about 25% and estimated to reach a whopping $ 180 Billion by 2025, these are positive figures for real-estate players in the ultra-luxury housing segment. HNIs (high net worth individuals) are aggressively considering luxury projects as part of their investment portfolios.
Implementation of RERA will help in improving NRIs confidence in the Indian residential market and luxury residential market in India is akin to the kind of lifestyle they are leading in foreign countries. Therefore, the project quality, customer-centric approach and professional property management become the deciding factors.
- The year 2017 witnessed some of the biggest policy related reforms in India, particularly the real estate sector. Considering the general elections happening in 2019, do you think the year 2018 would be more populist in nature or will carry forward the same aggressive trends?
The Government has set the foundation for making the Indian real estate sector a more organized and transparent sector. We hope that government will continue to work towards making the sector better to regain the trust of consumers. On the other hand, the developers also need to work with and support the government in all of its policies implementation.
- How was the year 2017 for Central Park? Amidst various market reports suggesting slowdown and even a sluggish festive season, how did your sales perform during the year? How do you plan to go ahead in the year 2018?
With the introduction of RERA and GST, the year 2017 can clearly be recognized as a period of landmark reforms in the real estate sector. These measures brought a brief dull period of demand and sales in the market due to consumers adopting a wait and watch outlook for properties. The registration of properties also took some time due to which the sales were halted.
However, Central Park took these changes in a positive stride as reforms were need of the hour. We saw a good growth momentum this year with a negligible dip in sales for a brief period. However, we feel that the market will recover and will be on an upswing by the start of second quarter in 2018.
- You have been majorly concentrated into the National Capital Region only since inception. Any specific reason for not entering into other markets so far and would this shift happen in the year 2018?
We have considerable presence in NCR region with a majority of our projects in Gurugram – Central Park on Golf Course Road, Central Park Resorts and Flower Valley at Sohna Road. Right now, we are focusing on further development of Central Park Flower Valley project that will see an additional residential development of 250 acres.
Having said that, we also forayed into commercial real estate with an investment of about Rs 2,000 crore. Central Park will develop a 40 lakh sqft mixed-use project in Sector 67, Noida. Based on the ‘Walk to Work’ concept, the project will comprise of 16 lakh sqft each of office and residential space. Another 8 lakh sqft of retail space will also be developed offering a mix of retail complex, hospitality outlets, and schools within the project.
- Do you think reforms like RERA and GST will help the real estate sector consolidate and operate under an organized format? Going ahead, how do you read their impact on India’s realty market?
In the past one year, the real estate sector underwent a lot of changes after the introduction of RERA and GST. These consumer-friendly measures will revive consumer confidence and trust in developers help in making the Indian real estate at par with international markets to attract more Foreign Domestic Investments (FDI).
These developments have also augured well for certain section of developers. Developers who have been operating under all rules and regulations have earned goodwill in the market. Such established players will continue to exist in the market and non-serious players will find it difficult to raise funds and execute project delivery in a more regulated environment.
RERA demands greater discipline and accountability on developers part, and we are confident that this will go a long way in rebuilding the trust among consumers and propelling the industry on a growth path on the long run.
6.What are your expectations from the Union Budget 2018? Do you think the government should bring real estate under the GST bracket and why?
Though RERA and GST have set the groundwork for a more organized real estate sector, the next best thing which Government could do for Indian real estate sector is recognition of industry status. This will further propel the consumer trust and the real estate sector will experience much healthier growth.
GST is another revolutionary step taken by the government to simplify taxation. The removal of multiple taxes and introduction of a fixed tax rate of 12 per cent will bring more transparency in cost of construction projects. The benefit of increased input tax credit now available to developers could result in property prices going down marginally. Overall, the simplified tax structure along with RERA will be instrumental in instilling consumer confidence and boost demand in the sector.