The concept of development management model is widely prevalent across the world and commonly used. Countries like Australia or England have adopted this model, where the developers are responsible for land acquisition, design approvals, beyond which the development company takes care of the entire process thereafter. In India, however, the scope for this model is still in its early stages, with significant potential for growth, says Navin Dhanuka, MD & CEO, ArisUnitern RE Solutions, a Bangalore-based venture which provides end-to-end operational and real solutions to real estate fraternity to help completion of projects in time.

In an exclusive interview with Sanjeev Sinha, Mr Dhanuka talks about the concept of development management model as well as the role of technology in the growth of the real estate industry in India. Excerpts:

How do you see the residential real estate growth over the next few years? What are the emerging technologies that will bring the changes in the sector?

The residential market is currently experiencing significant growth in demand and sales velocity, which suggests a positive outlook for the coming years. In particular, the mid and luxury segments are expected to maintain strong momentum in terms of demand. This surge in the real estate market can be attributed, in part, to the adoption of emerging technologies such as artificial intelligence (AI) and other digital tools. These intuitive technologies enable builders and brokers to gain insights into the preferences of their clients, enhancing their ability to meet customer expectations effectively. Additionally, the use of various app-based platforms in project management has allowed builders to streamline the construction process, resulting in improved quality standards. Overall, these technological advancements are elevating the overall quality and efficiency of the real estate industry.

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What is your take on the development management model?

The concept of development management model is widely prevalent across the world and commonly used. Countries like Australia or England have adopted this model, where the developers are responsible for land acquisition, design approvals, beyond which the development company takes care of the entire process thereafter. In India, however, the scope for this model is still in its early stages, with significant potential for growth. I feel that there should be robust laws in place to protect the interest of the service providers. Despite the need for legal safeguards, it is evident that the development management model is here to stay and will gain a strong foothold in a growing market like India. It will also bring in a lot of transparency and attract foreign direct investments (FDIs) into the industry.

How big is ArisUnitern’s portfolio right now and what are its expansion plans?

Currently, we are undertaking development management projects of around a million square feet. However, our primary areas of focus are plotted developments and bungalows and the total acreage is quite good. In terms of expansion, we have recently taken over a sales expert company, which adds to our capabilities. Additionally, we have a tie-up and line of credit of Rs 250 crore, primarily for land acquisition and last-mile funding. This positions us to provide developers with comprehensive support, including funding, raw materials, resources, and a flexible line of credit. Our aim is to secure sales mandate worth Rs 2,000 crore and we will be signing off close to 1.5 million sq. ft of development within the next 4-5 months.

What are the key projects your company has undertaken across India?

Our primary project locations are in Chennai & Bengaluru, with 2 projects in Chennai and 3 projects in Bengaluru. Additionally, we have a redevelopment project in Mumbai. Recently we launched a project in Chennai, called Ayana95. It required last-mile funding of around Rs 15 crore which was raised from alternative investment firm Jiraaf. We are the sole providers of materials for this project, and we have already sold 50 units, ensuring a healthy cash flow. With these successful ventures, our overall growth trajectory is moving upwards, and we hope to take it to the next level in the coming years.

What are the benefits that relatively smaller developers and landowners stand to gain by associating with a DM like ArisUnitern?

The benefits of being associated with a DM like ArisUnitern are manifold. We are the first and only Professional Service Providers in the entire South of India to provide end-to-end development solutions in the RE arena, including providing capital, materials, and a pool of talented professionals in all areas. So, smaller developers and landowners can leverage this to bring holistic expertise to their projects. Besides, associating with ArisUnitern can unlock a whole new realm where they can maintain a benchmark by managing the cost and quality of a project. Moreover, the association will also expose them to a positive funding environment, advanced project management, and planning, so that they can make the best use of their resources.

A 7% growth has been recorded in average home sizes in India in the last 5 years across the top seven cities. What are the reasons? How do you see the interplay with increased construction costs?

It has been observed that after Covid, there has been a general shift of preferences. After a 3-year hiatus people were desperately looking for ways to upgrade their lifestyle and moving to bigger homes gave that sense of achievement. As the uncertainties began to fade away and the markets recovered, people regained their stability in terms of income and job prospects, and they wanted to make full use of that by buying bigger homes. Additionally, the pandemic taught people the importance of investing to secure their future, and investing in larger properties became viewed as the optimal approach.

While there is a rising preference for bigger homes, prices have also increased considerably. One of the reasons is the surge in demand which led to the price hike. Another reason can be consolidation as there are not many developers. Though the economy is pretty much resilient, there has been a hike in construction costs, land prices, and other input costs. In addition, the 18% GST that the developers must pay can be considered as another significant factor contributing to the increase in prices.