Rajeev Piramal, executive vice chairman of Peninsula Land, says that he doesn't see real estate prices dropping in Mumbai.
Mofatraj Munot, chairman of Kalpataru Properties, says that the draft policy gives transparency to the buyer. He also adds that the price will be converted into carpet area basis.
Excerpts from CNBC-TV18's exclusive interview with Rajeev Piramal and Mofatraj Munot:
Is it a fallacy or is it a folly to expect that prices will collapse in Mumbai, or is it that the carpet rate will simply go up to adjust for this change?
Piramal: I think it's not possible that prices will fall in Mumbai. I think the market fundamentally remains same from yesterday and today. There has been no change at all. It's just that now one is looking at carpet areas as opposed to maybe built-up or super built-up or saleable area.
So I think prices will just adjust themselves. I don't see prices dropping because fundamentals of the markets have not changed at all.
You will simply sell at a higher per square foot rate on the carpet area than what you were selling for the built-up area?
Piramal: I think this means essentially the absolute amount that one pays for one's apartment as such happens to be the same, as carpet area is usually always lower than the built-up area.
Do you see any impact on prices because of these recommendations?
Munot: This gives transparency to the purchaser. It has nothing to do with the price according to me, but this gives a clear transparency to the purchaser.
It's a draft policy yet, but as a builder or real estate developer, does it have any big net impact on you, the sort of recommendations
Piramal: To be honest, it's early to fully respond the question. I haven't seen the full policy yet. I can't respond based on what I have seen in various newspapers, etc.
But from whatever I see, I don't see anything fundamentally different. I just think that what's important and what is a positive from this whole policy is the fact that the government is recognising the need to kind of deal with some of the issues that Mumbai faces in terms of slums and the encroachment of land and development of housing within the city as well.
I think that's the relevant and important part, but what impact it will have in the long run and how much of these white papers actually become laws, that only time will tell.
Anything in the policy to suggest, because of the carpet area ruling, you may realise less value in rupees from the land bank that you are about to develop?
Munot: The carpet area gives transparency to the buyer about what he is paying for.
Therefore it will be a complete equalisation and you don't think that there will be any loss in revenues to you from what you are planning to sell in terms of square feet?
Munot: The price will be converted into carpet area basis.
Almost exactly?
Munot: Basically it is a better transparency because unfortunately there are no norms of saleable areas, or people are not following all the norms. Though there is a code of conduct of MCSI, people may not be following it up. So this gives a clear transparency to the buyer about what he is getting and what he is paying for.
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