Outlook Business: Moving onto real estate, Atin, you had mentioned last year that clients were reducing real estate and investing in equities. Is that continuing?
Saha: Yes, clients are moving away from real estate and getting into financial assets. Equities have been a big option. The only difference this time around is they are finding it tough to monetise real estate. Our advisory has been restricted to select real estate funds. But even there, the client experience has been very bad (low single digit return) and thus, clients are not positively inclined towards these funds.
Outlook Business: Rajesh, you had mentioned last year that a lot of developers were in the general ward. Have any of them landed in the ICU?
Saluja: Real estate is not dead. Even today there is very good opportunity in the space. With the real estate bill being passed, developers are a little scared about not completing projects on time, as that could result in customer litigation. Also, with black money having gone out of the window, the sector is going through a churn.
Outlook Business: Where do you still see opportunity?
Saluja: In mid-income housing, there is a supply-demand mismatch. Homes in Vikhroli, Chembur and adjoining areas in Mumbai are going at Rs.20,000 to Rs.25,000 per sq ft. Today, Rs.20,000 in Mumbai has become mid-income housing. Within residential there is mid-income, there is group housing and luxury. Then you have land where cash flow has slowed down. At the higher-end, residential investments have slowed down because until a whole new wealth cycle gets created in the private sector, that segment is not coming back.
Commercial had slowed down in many areas but now you are seeing a pickup because of the yield, as the assumption is that fixed income over the next three-four years will fetch lower