Rakesh Jhunjhunwala believes that developers should concentrate on affordable homes
The billionaire investor stated that he is quite bullish on commercial real estate, as well as the logistics sector, which is still in its infancy.
Rakesh Jhunjhunwala, a billionaire investor, expects Indian real estate developers to focus on the inexpensive housing sector, keeping a close watch on the cost of affordable homes.
“Listed developers have a six-seven percent return on capital. On February 17, Jhunjhunwala spoke at a Confederation of Indian Industry (CII) event and said, “Steps need to be made to increase the return on capital.” He also sees a lot of potential for real estate investment trusts (REITs) in India, pointing out that the units of three REITs that are listed on local stock exchanges are doing well.
Commercial real estate is also a strong suit for Jhunjhunwala. He believes the logistics business is in its infancy and has a lot of potential.
Some of the key triggers for the Indian real estate sector, according to the billionaire investor, are consolidation in the real estate sector, the distinction between land owners and property developers, low interest rates on home loans, and the expectation of increased employment in the service sector.
“If India is to flourish, it must develop in real estate,” he remarked.
Over the last year, the country’s real estate sector has gained substantial traction, with increased demand for residential apartments. Housing costs are also rising. Housing prices are expected to grow in 2022, according to 56 percent of respondents to the CII-ANAROCK Consumer Survey – H2 2021, due to inflationary tendencies in building raw materials and total operational expenses for developers.
Between July and December 2021, the survey interviewed 5,210 people throughout tier 1, tier 2, and tier 3 cities using various digital platforms.
The housing industry in India has vastly improved since the enactment of the Real Estate Regulation and Development Act. The regulatory framework, on the other hand, must continue to adapt in order for the real estate sector to thrive. “The government of India should digitise the land records and issue digital certificates of title,” Jhunjhunwala remarked.
The investor encouraged developers approaching the capital market to seek cash through initial public offerings to be aware of the capital they have raised, the reason for which it was raised, and the potential return on that capital. “Don’t make promises you can’t keep,” he advised developers.
The S&P BSE Realty Index ended the session at 3,609, down 0.22 percent from the previous close. The BSE Sensex index fell 0.18 percent to 57,892.
