Interviw in The Economic times "ET REALITY" 14/3/08. INTERIORS
by Ravi Pugaliya
Interviw in The Economic times

Sutanuka Ghosal & Atmadip Ray/ Kolkata
But it isn't Kolkata's `Richie Rich' alone who are splurging on slick interiors for their homes. The city's urban middle class seems bitten by the home makeover bug too. And the reasons aren't hard to find. What, with rising aspiration levels, courtesy higher disposable incomes, lifestyle compulsions or even the overriding desire to own a flat. The bottomline --there's been a visible upsurge in interior decoration-related spends by the city's deep pocket middle class. Surprisingly, middle income group (MIG) house owners have emerged as the future growth drivers of a near Rs 100 crore interior designing markets in Kolkata. While business from the higher income group (HIG) continues to pour in, the MIG segment is tipped to fuel the growth in the coming days, especially folks who've bought flats in the Rs 12-to-18 lakh range. Says one of the city's leading architect J.P. Agrawal: "Business from the MIG segment is undoubtedly rising but the demand is primarily for plain-vanilla items such as furniture. This segment is still largely conservative and doesn't splurge lavishly on decoration. Whereas, a person buying an HIG flat or a premium apartment in the city spends around Rs 1 crore on decoration alone." "Market dynamics have changed completely. Today, we have clients from even conservative areas like Behala, Garia and Dunlop who wish to either dress up their new homes or go for a complete makeover of the existing property," corroborates Ravi Pugaliya, owner of the interior designing firm Ravi Pugaliya & Associates. In fact, for interior designers, this is as good as it gets. It is a sea change compared to say five years ago when the city's local firms looked for business in neighbouring states or went as far as Delhi and Mumbai scouring metros for business. Rising income earnings seem to be driving middle class aspirations for a better living. "Emergence of nuclear families and lifestyle aspirations too have added the zing," feels Bichitresh Saha, president, Association of Architects, Builders, Interior Decorators & Allied Business (ABID). Incidentally, ABID is Kolkata's apex body of interior decorators. City-based realtors are increasingly empanelling interior designers to help those buying their dream apartments. "We refer the names of interior designers who've designed the common facilities of a project such as club houses to our customers in case the customer is keen to get the interior decorated by an expert. We have also tied up with modular kitchen vendors like Godrej whereby our customers can buy such equipment at a much lower price," said PS Group CMD Pradip K Chopra. Rough estimates suggest that some 20% of the new MIG home buyers completely design their interiors by professional firms. "Bulk 45-50% of the clients get the design planning from a professional and executed either by local contractor with or without modifications or do it themselves," Chopra points out. So much so, the market is flooded with consumer durable products, floorings, tiles, furniture and even sanitary ware of different colour, shape and size tailor made for their 'preferred customers'. While children as well as GeNext usually opt for bright colours, elderly people usually prefer earth coloured interiors for their rooms, industry sources say. Clearly, realty revolution has given a boost to the interior decoration industry. Kolkata's interior designing market growth of nearly 60%, ABID feels is in sync with the national market. But the city is still price sensitive. "Kolkatans are eager to shell out money for interior decoration if they get the right value for it. It is not so in other metros. For Kolkatans, interior designing and decoration is considered as a fixed asset," says Pugaliya. Industry circles estimates, the cost for doing up the interiors range from Rs 400 per square feet (sq.ft.) to Rs 4,000 per sq.ft. or more depending on the quality of products and design element required for such face-lifts. "Customers now a days stress on effective space planning. They prefer minimalist interior fittings with light wall colours to give their homes a clutter-free look. The embellishments used are also mostly made of maintenance-free materials," notes Amber Chandgothia, another citybased architect and interior designer. Easy availability of finance from banks and housing finance companies too has helped spur the interior decoration industry. Banks are offering loans for repairing and remodelling old homes and even for furnishing the brand-new one. Most, if not all, offer separate loan schemes for refurbishment while loans for furnishing come as a combo-offer with the normal home loan. A home improvement loan typically covers work ranging from external home repairs, waterproofing, roofing works, painting, plumbing and electrical works, tiling, flooring or even works of grills and aluminium windows. What's more! Borrowers can avail of income tax benefits on the interest pay out up to Rs 30,000. Unlike home loans, there is no tax rebate on the principal amount of the home improvement loan. "Like home loans, home improvement loans too are easy to avail of and are repayable in monthly instalments over a maximum period of 20 years. However, such loans are costlier than normal home loans," a senior HDFC official said. HDFC offers 85% of the total home improvement costs. If HDFC has financed the property, the individual customer can even get the entire cost subject to a ceiling of Rs 1 crore. Such home improvement loans have a maximum repayment period of 15 years. Besides providing loans for refurbishment, banks including the likes of State Bank of India or United Bank of India have built-in furnishing loans attached with the normal home loan. Most of the banks offer supplementary loans for interior decoration or furnishing which is 10% of the total home loan amount. banks say this combo offer sells like hotcake. "Our combo plan has been well accepted by the borrowers. It provides the added advantage at the same rate of interest," SBI deputy general manager for personal banking Gautam Banerji notes. Corroborating, UBI general manager Swapan Biswas says, "we have seen a good demand for such a scheme in the Kolkata market. Most borrowers nowadays prefer to opt for such combo offers." Leading HFCs like HDFC or LIC Housing Finance are yet to come out with such combo offers. HDFC extends top up facility on existing home loans after a year which can be used for furnishing of home, consumer durable or even child education. ICICI Bank also offers top up loans after at least six months of the home loan being taken. The basic eligibility for such facility is good repayment track record of the borrower. People looking for loans to decorate the interiors of their home on a standalone basis can opt for a personal loan. Allahabad Bank, for example, offers a specific scheme for them with a maximum of Rs 3 lakh repayable in seven years. However, the rate of interest in such a case is currently 12.25% per annum on a floating basis than that on home loans which has been hovering around 9.75-10.75% per annum. Even while easy availability of loans is gradually expanding the market, a new client segment for interior designers is fast emerging in Kolkata. Believe it or not, the concept for a house makeover has caught the fancy of senior citizens as well. Many of them are opting for the recently launched reverse mortgage scheme which allows them to pledge their house with the banks and get a monthly or a lumpsum amount for 15 years while living in it. "Some of the old people are opting for this route and living in a better style for the rest of their life," adds Saha. With Inputs from