Ozone – Questions from Realty Supplement in India Post Feb’17

Attractive packages but no price drop

India Post News Service

NEW DELHI: Ozone Group has a proven track record of innovation and customer satisfaction as one of the premium property developers in Bangalore. From residential condos and serviced apartments to integrated townships, hotels, resorts and business parks, it has been successfully combining design and technology in all real estate projects. Their portfolio includes some of the most stylish and luxurious residential properties in Bangalore, Chennai and Goa.

In an e-mailed interview, Mr Srinivasan Gopalan, Group CEO, Ozone Group, talks on the impact of demonetization and other issues connected with real estate. The following are edited excerpts:

Demonetization:

There will not be any impact on the lower and mid- segment product offerings in most cities. The prices will not drop, as there is little leeway for the developers to drop prices. The Luxury and Super Luxury product segment will see some drop. But developers will not reduce the price of such offerings. Instead, they will offer freebees, schemes, promotions and other forms of enticements, to prospects, to make the deal sweeter.

What is referred as a jolt of Demonetization is actually a very positive step. The practice of using large amounts of cash in business activities was contributing to lack of transparency in all businesses. Demonetization has helped the business community in moving towards to a cleaner, no-cash system. Therefore, from an investor’s perspective, it has become much more safer and transparent.

Scope for NRIs

So far there was very little opportunity for individual investors to invest in commercial property as the value of such projects is huge, running into hundreds of crores. Now, with REITs allowing individual investors to come in, interested people with small amounts can be a part of large commercial projects. Commercial projects offer far better returns compared to 2-3% rental returns on residential properties.  Bangalore, NCR and Mumbai commercial property markets will offer even better returns in time to come, due the increased demand for office space.

We offer a popular Pre-EMI scheme to all NRIs who have bank loan eligibility. Under this scheme, the customer pays just 10% down payment and books the apartment. The bank disburses 80% of the cost of the apartment to the builder, as per construction progress. The Pre-EMI interest towards the bank loan is borne by us. Therefore, the customer pays nothing other that 10% until the apartment is handed over to him. At which point, he pays the balance 10% to the builder. This scheme makes it possible for investors to book an apartment with Ozone group, for as little as Rs 7.5 lakhs!

We also have Ozone Property Management Services division, that helps all investors with payment of property taxes, preventive maintenance, finding tenants, collection of rents, resale of the apartment, among other services. This is big plus and is a hit with all our outstation customers and investors.

USPs of Ozone projects

We only launch projects which are distinct and offer a set of benefits that are relevant to a particular target segment. All our projects offer lifestyle enhancing amenities and infrastructure, offering unmatched value. Be it our 185 acres integrated township project – Ozone Urbana  in Bangalore Or our 40 acre luxury residential project – The Metrozone in Anna Nagar or our Plug & Play boutique residential project in Santa Cruz in Mumbai, all of these have a clear set of benefits and a distinct positioning. Just in the last two years, over 1200 new NRI customers have invested in Ozone group projects. This is a clear indication of the consumer confidence in our company and products.

As for the future of Real Estate, I think. India is one of the fastest growing countries, offering immense growth possibilities. Land is in scarcity and will keep getting more and more expensive. Therefore, any investment in real estate will only appreciate in the medium and long term. With government implementing GST & RERA, real estate dealings will become clean, transparent and the developer will be accountable for timely deliver and quality. This will make investment in real estate even more attractive.

Following are some Questions from Realty Supplement in India Post: Answers from Mr Srinivasan Gopalan, Group CEO, Ozone Group.

1. What are the Major impacts of demonetization on Real estate ?

Demonetisation will have little impact on affordable and mid-segment residential  products in most cities. Even less impact in Bangalore, where there is no cash component, as majority of the buyers are working professionals. A very large percentage of these customers also avail of home loans from banks. Luxury product segment will be impacted because of demonetization.

Demonetisation will help cleanse the system of cash dealings and help give it a more clean and professional image. Which will be very good for the entire real estate development community.

2. What kind of process filtration you expect due to demonetization in the current scenario?

Since companies will not be allowed to make any cash payments above Rs 3 lakhs for business purpose, the need for having large amounts of cash in the system will also be reduced. Consumers will be encouraged to pay by cheque only. And, the developers, in turn, will make pay outs by cheque, to their suppliers and vendors. This is one process that will get established among small  to medium developers. This is system is already prevalent among large and established developers.

3. Will property prices go down after demonetization in India? If yes, how?

Like I said, there will not be any impact on the Lower and mid- segment product offering in most cities. The prices will not drop, as there is little leeway for the developers to drop prices. The Luxury and Super Luxury product segment will see some drop. But developers will not reduce the price of such offerings. Instead, they will offer freebees, schemes, promotions and other forms of enticements, to prospects, to make the deal sweeter.

4. Demonetization Brings Happy Days for Residential Property Buyers?

Not really. The happy days for residential property buyers will come more because of the better and cleaner system and not because of any anticipated price drops. Also, the proposed RERA and GST will also help push the developers to be more transparent and accountable. A combination of all these changes will usher better and happier days for customers of real estate.

5. What should any NRI keep into consideration while Investing Back Home ?

The most important thing to keep in mind is the reputation and track record of the developer. Second is, the expected returns on his investment, which is a function of the city, the location in the city and the attractiveness of the project.  The sum total of all these variables have a bearing on the rate escalation and returns on the investment.

6. Do Indian Developers delivering Realty at par with the quality available oversees?

There was a great deal of disparity before. Of late, the planning, architecture and construction has improved quickly and is catching up with overseas quality. This is made possible because of the  increased presence of International  Architects, Designers, Project engineering firms, Landscape consultants  in India. The same technical expertise is now freely available to all developers interested in creating a world class product.

7. How Safe is Real Estate Investment in India Today after such a big jolt to the Industry?

What is referred as a jolt is actually a very positive step. The practice of using large amounts of cash in business activities was contributing to lack of transparency in all businesses. Demonetisation has helped the business community in moving towards to a cleaner, no-cash system. Therefore, from a investor’s perspective, it has become much more safer and transparent.

8. India’s Real Estate Market: Time for the bubble to burst! What are your views on this statement?

There is no bubble in real estate. There may be minor a correction or a temporary watch-&-wait approach by the prospective buyers. This may delay the closure of the sales by some time. Prospective buyers are still interested in property , both, for end use as well as investment. Even now there is investment product that is better than real estate, in terms of medium to long term returns.

9. Scope for NRIs to Invest in Commercial Properties in India, what kind of Returns they may expect after Market Corrections?

So far there was very little opportunities for individual investors  to invest in a commercial property, as the value of such projects are huge, running into hundreds of crores. Now, with REITs allowing individual investors to come in, interested people with small amounts can be a part of large commercial projects. Commercial projects offer far better returns compared to 2-3% rental returns on residential properties.  Bangalore, NCR and Mumbai commercial property markets will offer even better returns in time to come, due the increased demand for office space.

10. What are the Initiatives Government is taking to boost Foreign Investment in Indian Realty Market? What are your suggestions?

As I said above, REITs will encourage and make it possible for small investors to be a part of large commercial projects, that offer attractive returns.  Also, RERA and GST and reduced home loan interest rates are some of the initiatives which will go a long way in increasing investor confidence and give a boost to the residential real estate sector. These measures will  also attract greater foreign investment into Indian Real estate.

11. What is the current trend in Real estate in your region?

India is seen as a bright spot among most countries, with the fastest growing economy, a large middle class and a young population.  If the macro-economic outlook is positive, investor confidence will get a boost. Therefore, I think, the real estate sector will pick up and do well by the end of Q1 20117-18.

12. What are the major USP’s of your project? Why do you feel that it could be the trend setter in your region?

We only launch projects which are distinct and offer a set of benefits that are relevant to a particular target segment. All our projects offer lifestyle enhancing amenities and infrastructure, offering unmatched value. Be it our 185 acres integrated township project – Ozone Urbana  in Bangalore Or our 40 acre luxury  residential project – The Metrozone in Anna Nagar or our Plug & Play boutique residential project in Santa Cruz in Mumbai, all of these have a clear set of benefits and a distinct positioning. Just in the last two years, over 1200 new NRI customers have invested in Ozone group projects. This is a clear indication  of the consumer confidence in our company and products.

13. What kind of special support you are getting from the Indian Banks facilitating the home loan for NRI’s?

Most NRIs bank with large Indian Banks such as HDFC, SBI, Axis Bank, ICICI, PNB among others. All these bank are pretty popular among NRIs and PIOs for Home Loans. Besides these bank, large players like India Bulls are also quite popular with customers abroad. The organisations advise and handhold the Indian customers opting for Home Loans and facilitate the transaction. It is due to the attractive home loan rates and schemes like subvention & excellent service from these FIIs that NRI sales are made possible.

14. Do you offer some special schemes and incentives targeting NRI’s?

We offer a popular Pre-EMI scheme to all our NRI, who have bank loan eligibility. Under this scheme, the customer pays just 10% down payment and book the apartment. The Bank disburses 80% of the cost of the apartment to the builder, as per construction progress. The Pre-emi interest towards the bank loan is borne by us. Therefore, the customer pays nothing other that 10% until the apartment is handed over to him. At which point, he pays the balance 10% to the builder. This scheme makes it possible for investors to book an apartment with Ozone group, for as little as Rs 7.5 lakhs!

We also have Ozone Property Management Services division, that helps all investors with – payment of property taxes, preventive maintenance, finding tenants, collection of rents, resale of the apartment, among other services. This is big plus and is a hit with all our outstation customers and investors.

15. What is your opinion on the future of Real Estate in India?

I think I have mentioned it before. India is one of the fastest growing countries, offering immense growth possibilities. Land is in scarcity and will keep getting more and more expensive. Therefore, any investment in real estate will only appreciate in the medium and long term. With government implementing GST & RERA, real estate dealings will become clean, transparent and the developer will be accountable for timely deliver and quality. This will make investment in real estate even more attractive.