In terms of financials, we have sold enough space to cover the entire project cost, which is Rs 1,200 crore. We have not taken any debt for this. It has started to give surplus.
Delhi-based real estate developer Omaxe is building a multi-level parking-cum-commercial project in Chandni Chowk. The company’s CEO Mohit Goel told FE’s Rishi Ranjan Kala that company’s strategy of investing in large integrated townships is bearing fruits. Excerpts:
What is Omaxe Chowk’s progress? How have you secured the funding?
Spanning across 4.5 acres, Omaxe Chowk will be located opposite Sis Ganj Gurudwara in Chandni Chowk and will have a built-up area of up to 1 million sq ft. It is a commercial project with a retail area and food court. Construction is in full swing and by January-February next year, you will see the structure. In terms of financials, we have sold enough space to cover the entire project cost, which is Rs 1,200 crore. We have not taken any debt for this. It has started to give surplus.
How do you intend to retire your debt?
I have a target to make Omaxe debt-free by September 2022. We are going full steam on this and may be we would be able to complete the process by January or February 2022. Our consolidated net debt is around Rs 1,400 crore (Rs 1,490 crore FY20). In FY19 it was about Rs 1,700 crore (Rs 1,711 crore). Omaxe is in the process of loan restructuring with its bankers. A couple of them have restructured the loan and we are in talks with 2-3 more. Hopefully by October-end we expect to complete the process. Our strategy of having a foothold in multiple locations is now paying off. We are number one in 10 cities so my risk is diversified. Besides, our integrated townships in 9 cities are also seeing a growing interest from buyers who are looking for a better living experience.
What are your plans for the residential segment going ahead?
We want to venture into residential redevelopment in Delhi in the next 6-12 months. At present, we are scouting for projects and have formed a team as well. We would pursue projects like there is an Air India employees colony in Delhi. Now the floor area ratio of this colony is 1, against the mandated 2.5. We intend take over such projects and redevelop it.
What is Covid’s impact on retail?
Since the pandemic stuck, people now want an organised retail. They won’t risk going to unhygienic places. Retail on a macro level has scope. On a micro level, it is very important to be the biggest in that particular market. For instance, with Omaxe Chowk we will be the biggest in this market. Choose a retail point that is largest in that particular market. For instance, in Gurgaon malls like MGF and DT took a beating when Ambience mall opened.
People now also prefer integrated retail spaces. We have 2 commercial projects in Chandigarh (about 40 acre) and Faridabad (around 80 acres). It has all formats of commercial property like 100-sq ft shops, malls, large spaces, etc. It will be a large retail space which will have almost all forms of shopping experience.
For instance, Omaxe World Street in Faridabad was launched in 2010. So far, we have developed 40 acres. Of which we have handed over 20 acres and construction is on in the other 20 acres. It is a preferred shopping and entertainment destination in the city as the space offers diverse shopping experiences from across the globe.
What future do you see for the office rentals business?
Office rentals has been quite adversely impacted by Covid. So we have decided to stay away from this space for next couple of years. I think at least for the next 2 years, Covid’s impact would be quite pronounced as absorption levels have come down to 70% and the remaining would take about 2 years to be absorbed.
Is there a growing demand for quality housing in tier II and III cities?
Because of Covid and the work from home culture, many office goers in metros prefer to stay in their hometowns and do WFH. So they are looking for large spaces. Hence demand witnessed a pick up there. These small cities have more low rise (2-3 floors) units than group housing. Plot, villas and floors are seeing demand in these cities as these are independent units. We are exploring to expand in Uttar Pradesh. We already have projects in Lucknow, Prayagraj, Vrindavan, Noida and Greater Noida.