What do you think about the National Land Acquisition and Rehabilitation & Resettlement Bill, 2011 that is set to replace the draconian land acquisition Bill?

There is this basic loophole in the draft Bill. There is no clarity on valuation. It is in a way exploitative. It is not just builders or the authority, who are going to benefit from land purchase; farmers in certain cases can also exploit.

Anshuman Magazine, chairman and managing director, CB Richard Ellis South Asia Pvt. Ltd

Property prices are high; policy rates are high too. Homebuyers are looking for easing of rates. Banks have turned cautious in lending to real estate. In fact, financial institutions are thinking of higher provisioning norms for the sector. Developers on the other hand are facing liquidity crisis. What do you think the future has in store for the realty sector?

If the policy rates keep going up, residential sales will be affected. Correction could happen in some pockets. Prime areas with high price points can see correction. But overall prices will remain flat. However, going forward, it is the mid-level housing segment that will sustain itself and continue growing.

What is your view on the recent Competition Commission of India’s decision on imposing a penalty on DLF Ltd for not treating homebuyers fairly? Do you think that builder-buyer agreements are one-sided?

Real estate transactions are a function of market. If the location is prime, product will sell. Just like a homebuyer is affected by market ups and downs, a builder is also working in an environment. They have to go through a number of approvals and sanctions. So for both homebuyers and developers there is no level playing field. Reforms should be on the ground. Having said that the builder-buyer agreements have improved over the last 10 years. Consumers are also more aware about the terms and conditions mentioned in the agreement. So if legal recourse in these matters is efficient, things will be resolved.

According to a recent report from CB Richard Ellis South Asia Pvt. Ltd, around 6 million sq. ft of retail space has been created in the first half of 2011. What does it means for investors and retailers? Will it have any positive impact on the rentals in this space?

Market is again active. The cost of retail real estate is high. During global recession, retail realty was hit the most. But we have seen activity going up over the last one year. Owners are now shifting to a revenue-sharing model, which is good for both retailers and owners. Rentals, being competitive in this space, will encourage retailers to expand. In tier II cities costs are less, but purchasing power is also small.

How is commercial real estate doing in terms of supply and demand? Is it good time to invest in the segment?

Commercial real estate, contrary to what many believe, is doing well. We have seen increased absorption compared with last year. Most of the demand was coming from IT/ ITeS sector companies. However, the trend is changing. Companies from telecom, pharma, fast-moving consumer goods sectors, and banking and financial services firms are also looking for space.

Last year, the commercial segment saw a supply of 55 million sq. ft. This year, between January and June, the supply was 16 million sq. ft. It is expected that approximately 20 million sq. ft will be added by the end of this year.