Indian residential property sector on the cusp of a sea-change: Anuj Puri

Anuj Puri, a 27-year veteran of the Indian real estate sector and a globally recognised expert on the property market, launched his new venture Anarock Property Consultants Private Limited earlier this year after resigning as the Chairman and Country Head for Jones Lang LaSalle (JLL) India.

Anuj Puri, Chairman of Anarock, Puri sees his new venture as returning to his entrepreneurial roots
Anuj Puri, Chairman of Anarock Property Consultants Private Limited, sees his new venture as returning to his entrepreneurial roots. Photo courtesy: Anarock

A graduate of the Shriram College of Commerce, New Delhi, he acquired the residential brokerage business and fund management vertical of JLL in India in March 2017.

“The decision (to acquire JLL’s arm) was driven by the huge demand for accountable and transparent real estate advisory services in the Indian residential property space,” Puri told Connected to India (CtoI). “There is a lot of pent-up demand both from end-users and investors which needs to be catered to. Also, we have created a residential funding platform via which we can bulk-purchase residential assets and sell them at more attractive prices to customers.”

Puri sees his new venture as returning to his entrepreneurial roots. “The launch of Anarock was long on the charts and very much part of my plans for the future,” he said. “It is conceived to simplify residential real-estate transactions through an effective mix of online and offline strategy.”

He is also keeping an eye out for international funding and interest, especially from Indians abroad. “The Indian real estate sector evokes a lot of interest from NRI investors,” he said. “There is consistent interest from Indian expatriates to buy property back home, either for personal use or for investment. The interest graph from expatriate investors has veered towards commercial properties in recent times. However, interest from NRIs seeking to own homes for themselves and their families back in India is still robust, especially given that property prices have bottomed out, interest rates are their lowest in a decade, and developers are making very attractive offers to entice buyers.”

Pointing out that investment into Indian real estate is led by NRIs from UAE, USA and Saudi Arabia, Puri said that the slow down of the residential market in 2015 combined with a slew of reforms and policy changes such as demonetisation, RERA and GST that adversely affected the operations of Indian brokers and real estate developers, led to a decrease in NRIs’ investment in the residential sector which is just a beginning to turn around.

Puri said that the pre-RERA residential brokerage sector in India lacks trust and transparency. Photo courtesy: Anarock
Puri said that the pre-RERA residential brokerage sector in India lacks trust and transparency. Photo courtesy: Anarock

“In 2012, NRI investments in Indian residential real estate were around USD7.5 billion, and this is expected to reach approximately USD5.25 billion by the end of 2017,” Puri said.

Commenting on the introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA), he said that 90 per cent of the brokers might not qualify for its provisions as the “current residential brokerage sector lacks trust and transparency”. 

“Developers have had to adapt to the new regulated market environment, and this has caused quite a few setbacks in terms of time taken to become compliant. However, the market is becoming a much easier, more navigable and more attractive one on its road to greater transparency and accountability,” he said.

“It is a clear case of short-term pain for long-term gains,” he added.

As to why he chose to launch his foray into the residential property market now, after over 20 years in the commercial sector, Puri pointed out that the Modi government’s triple whammy of RERA, demonetisation and GST has created waves in the Indian real estate sector that left a vacuum he and Anarock plan to fill.

“Demonetisation severely suppressed the resale homes market as well as the luxury housing sector, since cash components were the order of the day in these two segments. GST has not had a depressing effect as much as a confusing one, and GST exemption currently functions more as a marketing ploy by developers than anything else,” Puri told CtoI.

Puri also pointed out that overseas Indians were watching RERA deployment with interest. Photo courtesy: Anarock
Puri also pointed out that overseas Indians were watching RERA deployment with interest. Photo courtesy: Anarock

He also said that the residential real estate market in India had evolved to become largely consumer-driven and prices had come down considerably, creating a larger pool of buyers and wider cross-section of investors. 

Highlighting that the government measures will have a positive effect in the long run, Puri stated, “The residential property sector is on the cusp of a major sea-change. On one hand, it has just begun recovering from a prolonged slowdown on account of muted sentiment and on the other, the implementation of RERA and the Government’s determined push for affordable housing is boosting the revival curve.”

When it was pointed out that real estate fraud was the most frequent crime involving NRIs, Puri said that the introduction of RERA would make developers and brokers more accountable than ever before, with clear completion timelines and not allowing funds to be diverted wholesale to different projects. Conceding that it is still a work in progress, and many teething troubles have become evident, he said they should see a fully-functioning RERA environment unfold over the next couple of years.

Puri also pointed out that overseas Indians were watching RERA deployment with interest, and making investments into states where it has been fully implemented without severe dilutions.

“RERA has turned out to be a real market force, and the transparency it enforces will draw residential real estate back to centre-stage,” he said. “It is only a matter of time before the residential asset class catches up with commercial properties on the NRI property investment radar.”