Student housing, retirement homes, co-living will help realty grow: Parekh

Confident about real estate sector doing well as long as there are "right developers, right pricing and right unit size", eminent banker Deepak Parekh has said a number of new growth drivers are also emerging in form of student housing, retirement homes and co-living projects.

He also said foreign investors have also been investing in a big way in good commercial projects, while warehousing is another segment where they are showing keen interest.

"Student housing is a very big growth area and it has taken off well. Many universities, colleges and educational institutions are now in fact selling their own housing to raise money to build more classes, facilities etc," Parekh told PTI in an interview.

"The other growth area right now is co-living. People, including foreign investors, have also started talking about rental housing. And many are also building projects for senior citizens, including some being built by people themselves. We are funding some of them actually," the chairman of the country's biggest housing finance company HDFC Ltd said.

Retirement homes are like hostels with all kinds of facilities available for senior citizens, including medical facilities, and places like Delhi-NCR, Bangalore and Mumbai-Pune region have started seeing such projects.

According to a recent study conducted by News Corp and Softbank-backed realty portal PropTiger, the co-living space has emerged as a "real estate goldmine" that remains largely untapped and has potential to become $93 billion market annually on rising demand from students and professionals.

"This is evident from the fact that the supply by organised players in co-living is currently limited to over one lakh beds. Assuming they earn 1.44 lakh ($2,021) per annum per bed, organised players in this segment are currently $206 million," the study said.

The report further said that the co-living sector has total untapped demand of about 46.3 million beds, out of which 8.9 million is from student housing.

Among the existing players in the segment are RentMyStay, Rentroomi, SimplyGuest and Flathood. Other players such as NestAway, Stanza Living, Zolo, Placio and CoLive have recently entered this sector and raised funds to spread the business.

On the other hand, the co-working space is also seeing huge growth.

According to property consultant Knight Frank, co-working operators have leased 4 million sq ft of office space across eight major cities during the first half of 2019 to meet rising demand of such flexible area from corporates and startups. This marks a growth of 42 per cent over H1-2018.

Asked whether foreign investors, mostly private equity players, are also keen on investing in residential projects, Parekh said, "They are going big on commercial projects, malls etc. A large number of them are getting into joint ventures."

"They are also getting into warehousing, including for food, data, commodities etc. Warehousing is a big business now," he said.

He said some foreign players are also keen on residential projects and they would be keen to buy parts of a project if they get good discounts and this can be of significant benefit for developers who have unsold projects.

Earlier in his annual letter to shareholders, Parekh had said the housing market in India has been so far been looked at from the lens of the country's young demographic profile.

With 65 per cent of the population being under the age of 35 years, this trend is likely to continue.

At the same time, there is another demographic aspect that India now needs to focus on as the population of senior citizens in India is expected to grow to 173 million by 2025 -- a growth of more than double in a decade's time, Parekh said.

"By 2050, India is estimated to have 240 million senior citizens. The Ministry of Housing and Urban Affairs has demonstrated foresight by issuing model guidelines for development and regulation of retirement homes for senior citizens," he said.

The model guidelines call for a tripartite agreement between the developer, resident of the retirement home and the service provider. The service provider's role is to offer customised services to senior citizens such as medical, security, infrastructure, house-keeping, amongst others.

"One hopes the housing ministry will take up the responsibility to ensure that every state in India adopts these guidelines. This in turn would help widen the bouquet of housing finance products," Parekh said.

Banks have turned risk averse, says HDFC chairman Deepak Parekh

A day after Larsen & Toubro (L&T) chairman AM Naik raised concerns of challenging times for the private sector, Housing Development Finance Corporation (HDFC) chairman Deepak Parekh took a similar stand, saying banks have turned risk averse and that there is a distinct slowdown in the economy.

“The challenge today is risk aversion. Banks are reluctant to lend. There has been a flight to safety where a select few, high-rated non-banking financial companies (NBFCs) and housing finance companies (HFCs) have access to funding. But for several others, access to credit has been choked,” said Parekh, while speaking at the annual general meeting of shareholders.

“As a result, a number of NBFCs and HFCs have curtailed disbursements. This, in turn, has had spill-over effects into a number of other sectors,” he said.

“One is hopeful that normalcy will be restored soon and by the time the festive season sets in, some of the risk averseness should taper off. To my mind, what is critical is re-instilling the confidence of lenders to support growth in the economy,” he said.

“Evidently, there has been a distinct slowdown in the economy which was reflected in a lower GDP growth of 6.8 per cent in FY19. While there has been an across-the-board slowdown in consumption, given the inherent demand and low penetration levels, I do believe this is temporary in nature,” Parekh said.

On Thursday, L&T’s Naik had said India’s GDP growth will be 6.5 per cent this year, and accelerated spending is unlikely to happen in the next 18 months.

“Growth is going to be not more than 6.5 per cent this year. My feeling is that though they (government) claim it is 7 per cent plus, if we can maintain 6.5 per cent, we will be lucky,” said Naik at the company’s annual general meeting. “I think the government knows the economy is slowing,” he added.

Another senior leader of India Inc, Bajaj Group chairman Rahul Bajaj had also echoed a similar sentiment. “There is no demand and no private investment, so where will the growth come from? It doesn’t fall from the heavens. The auto industry is going through a very difficult period. Cars, commercial vehicles, and two-wheelers are going through a rough patch,” Bajaj had told Bajaj Auto shareholders in Pune last week.

“The government may or may not be saying this but there are clear-cut markings from the International Monetary Fund (IMF) and the World Bank, which shows a decrease in growth in the last three-to-four years. Like any government, they would like to put up a happy face, but reality is reality,” Bajaj had said.