Mahindra Lifespaces, a real estate firm which currently operates in the premium and mid-market segments, is now ready to test waters in the low-cost housing space. It builds residential homes and commercial properties under the brand ?Mahindra Lifespaces? and its integrated business cities comes under ?Mahindra world cities?. The company has completed about 5.8-million sq ft of development and currently has close to 8 million sq ft at various stages of launch or under construction which is spread across Mumbai, Pune, Nashik, NCR, Chennai and Nagpur. In an interaction with FE?s Nikita Upadhyay, the company’s MD & CEO Anita Arjundas speaks about the key focus areas in the year ahead. Excerpts:

Residential and commercial real estate prices have started looking up. Do you think they are sustainable at these levels?

For Mumbai market, I can say that prices have moved up really fast and have gone back to their 2008 peak. We never scaled up or went down significantly. During the worst, we corrected by 5-11% and on similar lines when we increased them. It was not a 15-30% irrational increase like others. We can see some project-specific corrections. For NCR region also, prices have gone up significantly. This area has lot of projects in the affordable space and is an investor-driven market. However, if prices keep on increasing, demand would be impacted. For the rest of India, prices haven’t really gone up and is at early 2008 levels. So, there is scope for a price rise.

What has been your learning from the slump?

In residential realty market, the learning for us has not been much as for the industry at large. Unlike others, we did not take huge loans and did not go on adding land banks. Land acquisition has to be done in the perspective of 8-10 years and one cannot go on adding unlimited land. Such companies during slowdown became debt-trapped and hence, the market collapsed.

During tough times, we did our inventory management efficiently and managed our land portfolio for short-, mid- and long-term. Players who were in the premium market segment kept on adding amenities till their products became unaffordable. Also, this industry is dependent on the feel-good factor, which disappeared due to job insecurities .

We are focusing on broad-basing our portfolio by entering the mid-market segment and by expanding into other new markets. We also want to enter 7-8 markets in a span of few years. Of these, one would be Nagpur and the other two in southern India.

How do you define this mid-market segment?

Anything between Rs 20-40 lakh falls under the mid-market segment. We have two ongoing projects in this space?Royal in Pune and Aura in Gurgaon. We have 1.5 million sq ft of ongoing project in this space. Also, we are planning to build 2 million sq ft of mid-market residential space which will be in Nagpur (Mihan SEZ) and Chennai World City (Iris Court). We are also looking at doing some work in Jaipur along with constructing premium spaces. We are doing a pilot low-cost housing for industrial workers at Jaipur World City. We will be replicating the model depending upon land cost, cost of construction, accessibility and availability of loans to these people. For such people, we are looking at doing work like taking 400 sq ft land, developing it at Rs 1,500 per sq ft and selling it at Rs 6 lakh. It is still premature to talk about it.

How much did these two World Cities contribute to your revenues? Are you planning other similar World City projects?

For 2008-09, these world cities contributed about 50% to our top line and other 50% from real estate (90% from residential and 10% from commercial spaces). Chennai World City is about 1,550 acres with a projected investment of Rs 4,000 crore, of which Rs 2,500 crore has been invested till March 2010. For Jaipur World City, it spreads across 3,000 acres with an investment of about Rs 1,000 crore. We are planning two more World Cities, of which one will be in Chennai and the next one in Pune of a combined area of about 4000 acres.