MaxVIL’s managing director & CEO, Sahil Vachani, told Rishi Ranjan Kala in an interview that the company is on lookout for more distressed properties and is planning to develop more than 5 million sq ft of leasable office area between Delhi, Noida and Gurgaon. Edited excerpts:
Max Ventures and Industries (MaxVIL), the real estate arm of Max Group, is focusing on developing Grade-A commercial real estate (CRE) in Delhi-NCR. Its project, Max House in Okhla, is on similar lines. MaxVIL’s managing director & CEO, Sahil Vachani, told Rishi Ranjan Kala in an interview that the company is on lookout for more distressed properties and is planning to develop more than 5 million sq ft of leasable office area between Delhi, Noida and Gurgaon. Edited excerpts:
You recently launched the phase 1 of your commercial project in Okhla, New Delhi. When will you launch the phase 2 and how are you going to fund it?
The second phase of Max House, Okhla, will be of exactly similar in size to phase 1 (1.05 lakh sq ft of leasable area). We expect a capex of Rs 110 crore for phase 2, funded by an approximately a 1:1 mix of own funds and external debt. We expect to commence work in Q3FY20.
Max House opened for leasing in August. What has been the response?
Max House is strategically located with excellent accessibility and connectivity to the entire NCR (National Capital Region) and will be the only grade A+ built-to-lease office in Okhla. After the initial phase of lockdown, enquiries have been increasing. We have undertaken several business development initiatives, including innovative product and pricing solutions like ‘Zero Capex Plans’ addressing cash conservation needs of occupiers looking to relocate to new office space.
During Q1FY21, many large occupiers started reassessing their office space requirements and firming up plans to move from expensive, old & strata (Office floor plates sold to multiple investors) sold offices to developer owned & managed offices with reasonable rentals to save on costs without compromising on quality and safety. Max Estates is targeting such tenants currently located at expensive and old office spaces in Delhi & Gurgaon. The company is witnessing enquiries with such relocation intent. We are confident that many of these enquiries will get converted to actual leases.
What is the status of your plan to develop over 5 million sq ft between Noida and Gurgaon for office spaces? You are also in discussion with funds to tap into new (and distressed) properties in Gurgaon. Could you share with us more details?
We are actively looking at opportunities in the distressed space and are in active dialogue for a couple of projects in Delhi-NCR. We had successfully carved out an office tower from one such distressed project earlier and turned it around to what we call Max Towers, a Grade A+ LEED certified commercial building. We had bid for developing this whole campus called Delhi One through the NCLT process and have been voted for almost unanimously by the Committee of Creditors. We are awaiting the NCLT process to complete to restart this project. It comprises mainly offices and some retail and residential.
The ongoing pandemic and the slowdown even before it, have brought many other distressed opportunities in the market. We are also aligned with global funds since we intend to do these projects in financial partnership with reputed domestic or international funds just like we did for Max Square project with New York Life.
MaxVIL is developing around 7 lakh sq ft of commercial space in Noida. What is the progress?
This Grade A+ commercial project, Max Square, is being designed to house commercial office space as well as F&B and entertainment areas. For Max Square – we have on-boarded our long-term trusted partner New York Life Insurance Company (NYL) as co-investors. All statutory approvals including building plan, environmental clearance, etc., are in place in a record time of five months despite Covid-led lockdown of three months in between. We expect to commence construction in Q2FY21 itself and targeted to be delivered by Q4FY23.
How would you compete against existing dominant lease office player DLF in Delhi-NCR?
Delhi-NCR actually has very few developers left who create build to lease Grade A offices at scale. For a large market such as Delhi-NCR, we actually need more players to ensure a thriving ecosystem. As a differentiator, Max Estates is not just creating a commercial project for tenants to lease, we are creating an experience for them by providing meaningful value-added services which are provided by MaxVIL’s other subsidiaries, Max Asset Services (MAS) & Max Investments (Max I).
Co-working is a big trend in office space today with even established corporates considering it. Is a conventional developer model still relevant?
What we believe is that both co-working and conventional developer models are inter-related. Co-working business models are a very new concept and yet to be proven successful. Conventional developer models will continue to be in demand as co-working places in India mostly lease spaces from conventional developers. For example, we have also leased out space in Max Towers to a co-working company.
Co-working gives flexibility in terms of lease tenure to its tenants but at the same time frequent turnover and vacant area itself puts the co-working business model at a risk. So, growth of co-working spaces helps growth of CRE.