Surendra Hiranandani, founding member and managing director, Hiranandani group & Hiranandani Upscale, is not the most visible face of the Mumbai-based group of builders. His elder brother Niranjan is the spokesperson. But the younger sibling is now making his presence felt with some seven township projects under Hiranandani Upscale, a company promoted by him. The formation of this company triggered speculation that the two brothers had gone their own ways. Surendra clarifies his position in this interview with fe?s Viveat Susan Pinto. He also speaks about his areas of interest, the nature of his relationship with his brother and his ownership in the group. Excerpts:
Are both of you working together?
Yes, we are. We continue to have a large presence together. We are doing projects in Mumbai and Thane together. In fact, both of us have a 50% stake each in all these projects. It includes the existing Hiranandani Gardens in Powai, Mumbai and Hiranandani Estate and Hiranandani Meadows in Thane. We recently launched a residential project in Khandivali, Mumbai, together. There are some more, at Sahar, Sakivihar and Chembur, all in Mumbai, which we will be doing together. There are also some projects in the Thane region that we will be doing together. There are some slum rehabilitation projects that we have on our plate as well. That?s quite a bit. We sit in the same office on the same floor in the same building. I hope it clarifies the point that we haven?t separated.
Then why did you launch Hiranandani Upscale?
At some stage, you need to factor in the next generation. I have children and so does he. There has to be adequate work for all of them to do. This is why I started a company of my own, where I took up projects individually. My daughter Neha, 24, is involved in the business, too. I have two more children?Komal, who will be 22 this December and Harsh, 18. They are not involved in the business at the moment. Neha is a director in the company. She takes care of all legal and financial issues. At the moment, I have about seven township projects. Construction work at two projects in Chennai and Bangalore has begun. Work on three more projects will start in the near future. Two more projects will take some more time, possibly another year for the work to begin.
What is your portfolio like?
Hiranandani Upscale has a land bank of 650 acres spread over three cities – Chennai, Bangalore and Hyderabad. We have begun construction at our key projects in Chennai and Bangalore. The Chennai-Eggatur project is the company?s flagship. It is spread over 110 acres and has a development potential of 13 million sq ft. The project will have a number of highrises. The residential component is large. In fact, all my projects are primarily residential in nature. Being an integrated township, it will have a school, primary healthcare, retail and commercial establishments. But the focus on the residential component will be more. The Bangalore project is a villa project. It?s a project of lowrises. Apart from villas, there will be cottages and apartments as well. But the thrust is on villas and cottages. This project is spread over 95 acres. It has a development potential of over 2.5 million sq ft. I am bullish about my other projects as well. If I take all my projects together, then the development potential is over 40 million sq ft.
But are buyers coming back to the market? Are pre-sales happening?
Yes, they are. In the Chennai-Eggatur project, for instance, we have been able to sell 800 units spanning six residential towers of over 25 floors. I am not saying that the going has been easy. The comeback has been slow in cities outside Mumbai and the National Capital Region (NCR). But it is there. I have been in the real estate business for over two decades. I have seen both booms and troughs. I was prepared for this. Let me tell you that we are constructing what we have sold. Plus the land that we acquired for the Chennai and Bangalore projects was not acquired at a premium. That helps keep overall costs under control. Developers suffered because they acquired land at a premium. Top this with development cost and it was difficult for many to recover what they had invested when there was a correction in property prices. We have been careful not to take huge bets on land. Before acquiring the land, we do a title search of at least 30 years to trace the original owners. We work with local entities closely to be able to do this. It?s not easy, but that?s how we?ve been able to aggregate land.
Which other segments are you looking at besides integrated townships?
Hotels and retail establishments. We are also looking at the possibility of constructing affordable houses. But the biggest issue there is low margins. The carrying cost of land is huge. Add to it development costs and there is a sizeable investment going from your end. Affordable housing has to be priced in a certain manner to get customers to get volumes. That can hit your margins enormously. This is one reason why we have been a bit slow.