How do you see the growth of the real estate industry in five years?
Sky is the limit for this industry. There is a correlation between the growth of urban centres and the GDP of the country. In China, the growth of urban infrastructure is 2-2.5 times that of the GDP. In India, it is up to 2-3 times of a GDP of 8-10 per cent. So, 25-30 per cent growth is required. We are nowhere near this figure. But one thing is for sure, prosperity is going to stay, irrespective of the political situation. One DLF cannot meet this demand. We need hundreds of companies like DLF to meet this demand. Growth would be mind boggling. It will be a sunrise industry for many decades ahead.
But, the government is taking measures to curb foreign money supply to this industry to control inflation...
In my view, this is a counter-productive measure. What is inflation? It is something that hits the common man such as foodgrain and items for daily purchase or rents. If you choke this money supply, a shortage is bound to happen. Is that taming inflation? Today, India needs massive doses of development construction, so that the supply over takes demand. Choking money supply will make rents more expensive, which can be brought down only by increasing supplies. If demand exists, developers will find means to bring money.
Now, if you start choking money supply and demand remains, they will go back to the means from where they borrowed money earlier. It is an old school of thought that increasing interest rates will tame inflation. This is real estate, here you pump in money, construct and create more supply.
Your company is betting big on SEZs, which while seen as future growth machines are also viewed as a land grabbing exercise. What is your take on the issue?
SEZs will only succeed where there is a good manufacturing base. Can you imagine, manufacturing being done in a backward area? These issues keep cropping up. Some will succeed, some will fail. Market forces will decide their fate. Government policies for SEZs must be more enabling and facilitating, not for creating hurdles. What is happening politically is creating hurdle and is unfortunate. Regulations are correct. SEZs are a right measure, but should be done the way China did it. Unfortunately what happens in India is you go two steps forward, one step backward.
Real estate is seen as an asset bubble. Do you see prices falling?
Has it happened? It has not. Eventually the customer is the test, so if you do a good project, they will come to you. When there is so much of demand, even guys with minimum capacity enter the markets. Developers, who cannot sustain competition will have to go, but good projects will always attract customers.
Your company has commercial, residential projects lined up across urban centres in the country. What are you doing for rural India?
That is not the role of DLF because we have a dedicated focus. Our role is urban infrastructure. That too urban areas - where more money is to be made, because we are a business house. At the moment we are not getting into rural infrastructure.
