In spite of the no-show by international majors in multi-brand retail in the country and Walmart breaking up with Bharti recently, Carlo Barel di Sant’Albano, chairman of the Board & CEO EMEA (Europe, Middle East, Africa) of Cushman & Wakefield, insists all big chains are looking at India. In India on a short visit, he speaks with Nivedita Mookerjee on the US shutdown, overall slowdown hitting realty, geographies which have escaped the downturn, and more. Edited excerpts:
Has there been any impact of the US shutdown on global real estate?
Investors have been cautious in the past few weeks because of the shutdown. But overall, luckily in the US, the activity has been on a crescendo for the last one year in terms of transactions. So investors did not stop looking at opportunities. They may have paused a bit to see what happens.
How has the economic slowdown played out vis- a-vis real estate around the world?
If you look at the period 2008-09, there’s no question that you felt a significant impact on real estate transaction and value. Capital markets activity dropped around the world, by about 60 per cent. There was a massive slowdown of activity. If you look at where we are today, we are at about 85 per cent of where we were in 2007. The difference is that Asia is a significant component of that. From the real estate standpoint, the market has really come back.
The economic data coming out of the US a few months ago showed there was one good number and two bad numbers, indicating that recovery was struggling. Now its moving to two good numbers and one bad number. Its not totally out of the woods, but its certainly improving. US is really active on the real estate front and has an absolutely positive effect for the rest of the world. The recovery has begun.
What’s your take on the Indian real estate sector?
In the last 12 to 18 months, developers and investors who deal with us feel real estate sector has slowed down. But real estate is a matter of cycles. As economy grows faster, real estate activity will come back. Good assets will always have a value appreciation. It may take time, but it will happen.
Do you see real estate prices going down?
When you look at Tier 1 high quality property, even if prices come down, the drop is marginal. As you go down the scale in quality, or maybe go to a tertiary town, there’s less interest in difficult times. Investors are still paying attention to attractive market.
Where have you witnessed the maximum drop in prices? And why?
Can’t say really where exactly. But the decline is mostly in tertiary markets and in certain micro pockets. The gateway cities of the world have suffered the least.
Are there any geographies which have escaped the downturn?
Three gateway cities for sure have escaped the downturn. One is London which is a safe haven. Then there’s New York which is always a rejuvenation story and always comes back. The third city is San Francisco which too has not faced any impact of the slowdown as it is about technology growth and new business being created all the time.
What’s the strategy that one should look for during economic crisis to keep real estate stable?
Having a strong and cautious banking system is the best way to stay protected. That’s what helped India too.
Is there any timeframe you are looking at for revival in real estate around the world?
Real estate market is never stable. That said, the volume of transaction is expected to grow within a year.
Which are the segments or categories in real estate which have not been hit by the current environment?
Luxury retail has not been hit in most parts of the world I would say.
What would you have to say about the recent breakup of Walmart and Bharti in the Indian market? Will it manifest in retail real estate space in any way?
I have no comments on the breakup, but the development may have sent out a negative signal to the world. Overall I think, India story is intact, based on consumption.
No international retailer has filed applications to operate multi-brand chains in India so far. Do you think the big retailers around the world are keen to come to this country?
I cannot talk about when they would come. But no international retail chain can afford to ignore India. I would say everybody is looking at India.
Source: Business Standard