‘Tracking the Recovery,’ which launched on Bloomberg TV, aims to take a microscopic look at whether the economy is really in recovery mode. Mini Menon, Executive Editor, Bloomberg TV India expects to hit hard upon some key issues that have been slowing down various sectors, and the show begins with tracking real estate. In a conversation with exchange4media, Menon talks about the DNA of the show and the various issues plaguing the real estate sector in India.
What can the viewers expect from the show 'Tracking the Recovery?'
Everybody is talking about ‘Acche Din’. Most people believe that the worst is over. So you see a commensurate increase in the stock market, FII money coming in. But what is the situation on the ground? Has this cheer really reflected on the ground? That is what 'Tracking the Recovery' tries to really get a sense of. What we have done on the show is, identify the sectors that have been the most stressed out during the last economic down-cycle and we want to do a bottom-up, pan-India look at what the situation is on the ground, and what will it take for these sectors to recover. So we started off with the real estate sector.
If you remember, from the peak of 2004 to 2007 the fall of real estate was very stark. In 2009 there was a slight pickup, but the last three years have seen a lot of troubles compounding for real estate players. They have got very high levels of debt and a lot of them had very big plans based on the economic growth, which was pegged at 8 per cent. And all of that came undone because of the slowdown. They had huge problems raising funds because the headlines kept saying that they are in bad shape - everybody has been talking about real estate on the brink. The basic question that we start off with on ‘Tracking the Recovery’ is that, as people talk about recovery, how is recovery panning out and can they really shake off the legacy problems and move ahead and what will it take them to do well.
We will also take a granular look at other critical sectors such as power, roads and infrastructure, ports and logistics and aviation, not just the big picture.
Affordability in real estate is a key question in the minds of viewers. Will the show address this issue?
That is one of the hard questions we are asking. Despite the crises and the unsold inventory, there are three lakh units unsold in the Delhi market, and yet there has been an increase of around 25 per cent to 55 per cent in key markets across the NCR region. It is confounding that if you don’t have houses that are sold why are you not bringing down prices? This is one of issues we are raising with all the real estate companies - why are prices still so high if you have not been able to sell your inventory? That has brought us to some structural issues in the industry and to the conclusion, that perhaps the biggest problem the industry is facing is that it is not a simple demand-supply kind of market.
There are a lot of other issues that real estate companies are grappling with, some of which are self-inflicted. But what is happening is the inbuilt cost of inflation has meant that prices of houses have gone up and they are also not putting down prices because they don’t want investors who have invested to lose out. No real estate company can afford to bring down prices because there will be a crisis in hand. And many of them have raised money on the basis of certain projection spends. One of the tough questions we are asking industry experts, is that if the prices don’t come down how are you going to sell the inventory? Housing still remains largely unaffordable for most people in metros.
Is the real estate a bubble about to burst and what do you expect to bring out through the experts on the show on this?
This has been an issue that has been a recurring theme in headlines through the last four years, that it is a bubble that is about to burst. But my own sense is that the demand in India is so high for housing that if the legacy issues are taken care of, and the internal issues are addressed, it might not be a bubble after all.
Marketing spends of developers have been growing in recent years. Is this something that your show will address?
In fact we have already touched upon that in the discussions. One take away from that is there are so many players in the real estate sector, that bigger ones are working that much harder to create brand names because this is a business where reputations count more. So what is happening is that they want to create brands that connect with the consumer and they feel that in the long run that is going to help them.