You plan to treble your project launches to 15 this fiscal. How is it progressing
Thats on track. Four of them are already launched and a lot will happen in the next three months during the festival season in Q3 and Q4.
What is the plan with the R770-crore residential development platform that you have formed with international investors led by Dutch firm APG Sparinvest Property Investors
We are evaluating some deals but nothing has been deployed yet. We concluded the partnership in June-July this year, so the time line for investment is 24 months. We hope to close some deals before the end of this fiscal.
Is it not a deviation from your strategy of operating only through joint venture-joint development model rather than purchase land
Our strategy has always been capital efficient land sourcing and not really a joint venture or joint development. So the strategy is not to buy land on our own balance sheet and we are not doing that here. This is actually quite similar to a JV, except that instead of partnering with a land owner, we are buying out the land but in partnership with the financial partners.
Have you finalised the geographies where the funds will be deployed
Primarily it will be Mumbai, NCR and Bangalore, but we will also look at projects in Chennai and Pune in the residential space.
Your project Godrej Summit was sold out the very first day of bookings opening. What led to it in such a depressed real estate market
Its a two million square foot residential project very close to the upcoming Dwarka Expressway, which will make this area very close to Delhi once the Expressway is built. Yes, we received a fantastic response on the project and you do hear some good news in the real estate market once in a while given the current market situation. I think the Gurgaon market in general has been among the stronger markets. The Godrej brand is helpful in attracting customers. The most important part of the project is how close it will allow you to be in Delhi, while still affording people an opportunity at a reasonable price point.
What has been your experience of the Mumbai market
I think the competition in Mumbai and in some other cities poses some difficulty. Customers are also looking more on reliability of companies to deliver on their commitments the level of confidence that they have in good companies brands and so on. I think that for us is a big advantage.
How do you read the finance ministrys intervention in realty sector
The real estate reforms are needed and it will be a good thing. On some of the other reforms, the devils are in the details. And yes, reform is good, and regulation can be good. And definitely there are certain sectors that are in desperate need of regulation. But if the idea of regulation is going to be to add more bureaucracy which will slow things down further then thats where problems could arise.
Are approvals for projects coming faster now in Mumbai
I think approvals are coming, but theyll continue to remain a time consuming process both here and in other places across the country. The big difference is that there are clear set of rules that have made the market a more level playing field for all developers.
With the FDI in retail getting cleared, is Godrej Properties looking to enter the retail real estate segment
We are not seeing it as a specific or direct business opportunity there. We want to focus on the residential segment.
Do you see it as a boost to your commercial real estate plans, on which you have gone slow
All our projects in Bandra Kurla Complex (BKC), Vikhroli, Kolkata and Chandigarh are going on full swing. Nothing of our current portfolio has changed anywhere. We would like to focus more and more on residential space.
Fundamentally that was not a call that we took due to short-term market conditions. I think perhaps this is the right time to invest in commercial real estate because nobody is doing so and when the markets improve three-four years later and the projects are ready they will do quite well. It is more from a broader strategy perspective as our goal has always been to be a capital efficient company, minimise the amount of capital to create higher return on it.
How is the offtake in the existing commercial projects
We expect our BKC project to be launched in the third quarter. We will be selling our Vikhroli project to our group companies, because we dont want to sell that externally. Our Chandigarh and Kolkata projects have been a bit slow. Commercial markets in some of these tier-II cities are certainly not where we would like to see it so we are looking at deals where we could sell larger space to investors or various ways to monetise those projects.