“In sync with market requirements, market realities, the buyers are okay to pay that kind of price rise and in such times that price rise does not go haywire, stay closer to double digits, etc, we are in safe zone,” says Gulam Zia, Knight Frank India. Is that a trend that you are observing as well, when it comes to the pricing there is nothing extraordinary, 6% to 10% in line with inflation and is it that there is that definite dichotomy maybe between how luxury is panning out versus the affordable segment?Gulam Zia: Well, I would love to agree with Anuj word by word. What he said is exactly what the market is right now behaving like. So, to start with the point that you wanted me to also clarify was on price rise. Bang on, about 5% to 7% price rise per annum is something which we have been observing for last couple of years, at least last two to three years, and which is in sync. In sync with market requirements, market realities, the buyers are okay to pay that kind of price rise and in such times that price rise does not go haywire, stay closer to double digits, etc, we are in safe zone. Unlock Leadership Excellence with a Range of CXO CoursesOffering CollegeCourseWebsiteIIM LucknowChief Operations Officer ProgrammeVisitIIM LucknowChief Executive Officer ProgrammeVisitIndian School of BusinessISB Chief Technology OfficerVisitSo, this price rise is not worrisome for the moment and that is reflecting in the transaction numbers as well. We have been watching and, of course, there are a few words of caution emerging from a few quarters, stating that the current quarter ending in a few days from now is not as good as what we would want to believe, but I would still say that it is a bit too soon to just look at one quarter performance and give a conclusion because I would look at at least five-six rolling average quarters and there is nothing to worry about. In fact, the previous quarter had been performing far better than YoY growth, etc.So, overall, transaction volumes also have not been affected yet and ultimately coming to the difference between the sales in super luxury vis-a-vis affordable, again, what Anuj’s assessment is perfectly bang on. This is exactly what it is. The big problem is that not many developers are keen to get into the lower end of the market to cater to that segment because of lesser margins over there. So, most of the focus is on the upper end, when quick sales are happening, margins are far better and that is something which is reflecting in lower volumes of inventories in the lower end and that is directly reflecting into the transactions in the affordable housing. So, net-net, this is where we are, affordable housing is still suffering, whereas the upper end continues to show bumper sales. The other thing I wanted to talk to you about as well is the fact that when it comes to commercial markets, what are the trends that you are spotting because there seems to be the biggest disconnect perhaps in what is happening in the commercial real estate market as opposed to residential?Gulam Zia: Well, I would beg to disagree. Commercial real estate also is doing phenomenally well. If I have to give a few numbers, the last quarter and we saw almost about 14 to 15 million square feet of gross absorption of office space in the country, the top seven-eight markets that we always talk about. And current quarter, the way the things are stacking up is going to be outstripping that number, doing better than at least 15-16 million. So, if I look at the first half yearly, we are poised to break all records historically. We could cross at least 60-65 million very comfortably, which would be better than what we did pre-COVID numbers. I would want to put it on record that while global trends are way different than what is happening in India, at least in India commercial market is here to perform and it is visible all over, both in terms of new supplies coming in, lot of the respected developers are bringing in huge number of supplies as well which will be not overstepping the demand. It is going neck to neck. But in terms of absorption, office markets, and of course, Bangalore has been outperforming like all the years. Hyderabad is a great performer. Pune, Delhi, Chennai, pretty much all of them are reaching that double digit million square feet per year kind of number, which is once again giving me confidence that the current year, the way things are stacking up right now will be historically best as far as commercial real estate is concerned.
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