Strong residential sales are expected in this festive season, which will push the realty market to a decadal high. Despite the interest rate hikes and a slight increase in property prices, consumers’ preference for home ownership is only growing. Sensing this uptick, developers are also offering a wide range of properties in both the affordable and luxury segments, says Angad Bedi, Managing Director, BCD Group.
In an exclusive interview with Sanjeev Sinha, Mr Bedi talks about the impact of the rising interest rates on residential sales as well as the kind of opportunities being witnessed in the stressed assets market, and also shares his business outlook. Excerpts:
Have the rising interest rates impacted residential sales? What is your future outlook?
The cumulative hike in the repo rate by 190 basis points by the RBI has definitely raised the housing loan interest rates. Also, the rise in input prices has led to some increase in property prices. But, I don’t think these have anyway dented the housing sales because the consumer sentiment remains so strong. Let me give some numbers. In Q2 (April-June) of 2022, a JLL report said over 53,000 residential units in India’s top seven cities were sold, more than double from a year earlier. Interestingly, most of the sales happened in the Rs 50 lakh- Rs 75 lakh category with Bengaluru and Pune driving the most sales. These figures indicate that buyers are actively looking at purchasing properties, which will get a further boost during the festive season owing to strong sentiment, stamp duty cut in some states and sound supply of properties. Moreover, sale of most properties in the affordable segment indicates consumers’ buying power remains intact due to strong economic revival. Buyers take many factors into account before purchasing a property and interest rate is one of the elements. The COVID pandemic has brought in a resurgence in home sales and that is going to remain that way in the coming quarters. Cities like Bengaluru and Pune will continue to see strong momentum in terms of housing sales.
Do you expect the festive season to bring cheer to the residential market?
The upcoming festive season will see strong residential sales, pushing the market to a decadal high. This is because we have to understand that after two years of COVID-induced disruptions, we will see a normal celebration of festivities. So, a lot of pent-up demand coupled with strong consumer sentiment among prospective buyers will turn into real sales this time around. Secondly, Indian economy remains resilient, and the latest Consumer Sentiment Outlook (July-December 2022) suggests that real estate has remained a favourite asset class among potential buyers. Moreover, surveys indicate that companies have doled out double-digit salary hikes in 2022. So, despite the interest rate hikes and a slight increase in property prices, consumers’ preference to own a home remains high. Sensing this uptick, developers are also offering a wide range of properties in both the affordable and luxury segments. A recent report by ANAROCK showed Q2 of 2022 was the best performing quarter since 2015. By all indications, Q3 will be a lot better than the previous quarter on the back of festive sales.
Can you tell us about the BCD Group’s journey so far?
Our journey started over 70 years ago, which has given us an amazing foundation to begin with. Our legacy has given us the chance to grow right alongside New India and pave the way for a smarter, future-ready realty landscape that caters to the ever evolving needs of the community. Over the decades, the BCD Group has transformed from being Indian’s oldest and most-trusted construction & design names, to one of the country’s largest & fastest growing global realty conglomerates – with over 100 million square feet of development across India & key global markets.
Given our decades of experience in developing state-of-the-art infrastructure like Steel Plants, Hotels, Power Plants, Cement Plants, Runways, Oil Refineries, Airports and Stadiums, today, we hold a commanding position in the real estate industry and are best known to deliver economically sound & efficiently design projects of all types and magnitudes.
We are among the preferred partners for Fortune 500 companies across industries, and have an unparalleled reputation for developing world-class group housings, commercial complexes, malls, hotels, hospitals as well as infrastructure, across the country. Driven by the beliefs of our founding values, we always build with purpose, attribute to our growth to our people and our principles of integrity and innovation. We have India’s largest labor force, with 4000 workers on-ground, whom we believe deserve only the healthiest and safest work sites catering to international standards of safety compliances.
What are the notable projects you have done recently and where?
The BCD Group operates across the spectrum in the real estate industry, and has expertise in three major segments of commercial, residential and retail. In the recent past, we have delivered on a commercial and residential project spread across 3 million square feet in Bangalore.
We believe in building with purpose and catering to the dynamic needs of the communities and corporations across the value chain. In fact, we are at the helm of launching a 55 acre, smart and affordable township in Bengaluru, located in the biggest special economic zones in the country. The 900 smart sized residences come with unique 1 BHK and 2 RK specifications, that have been designed to provide greater value & an enhanced lifestyle to the diverse needs of Bengaluru’s communities, at the most affordable price point in the neighborhood.
The project is especially close to our hearts, as it features three decided towers that have been especially designed for the elderly, with a larger aim to make the lives of our elders safe, happy, healthy and hassle-free in every aspect. From fully-furnished plug & play home units, daily housekeeping services and unparalleled on-site medical care, we have taken into account all the unique lifestyle needs of those who deserve it the most – our seniors.
We have simultaneously launched India’s second largest stress asset fund worth Rs 8,000 crore, to provide a much-needed post-pandemic lifeline to pending projects, in order to create shared value in the realty ecosystem.
What made you transition from a construction company to a customer-facing brand?
When we entered the real estate industry in the 1950’s, we made our mark in Construction by bringing to life some of the most complex, challenging and large scale infrastructural projects in the country and abroad. We were one of the first to foray into high-quality commercial, residential, retail and hospitality projects, by introducing international-best practices, latest technological innovations, cutting edge engineering and the timeliest deliveries, all with the backing of an infallible workforce.
Today, we have greatly diversified and offer 360-degree real estate solutions including construction, development, consultancy, bespoke services, and most recently, funding.
We cater to a global audience and have footprints across 7 countries and counting. We aim to build on the strong values of our company and continue to create sustainable and superior value for the brave new world of today.
What are the challenges that you are facing currently?
India’s real estate industry has emerged as one of the strongest pillars of the Indian economy, having survived the 2008 global financial crisis, demonetization and most recently, the COVID-19 pandemic.Nevertheless, the industry had taken a hit every time and the domino effect of this has led to a liquidity crunch for segments like the residential sector, which forms the foundation of the real estate industry.
According to estimates by Anarock Consultants, the total value of stressed loans to the real estate sector currently stands at roughly 2.5 trillion dollars, only marginally lower than the quantum of such debt at the end of 2019. The residential real estate segment has the highest number of paused projects, blocking capital flow of $60-70 billion dollars as reluctance of NBFCs. This liquidity challenge further added to projects getting stalled.
This opens up a huge window of opportunity for Alternative Investment Funds (AIFs) which can offer a new lease of life to stalled projects, thereby unblocking the capital and generating attractive returns.
As one of the only zero-debt realty firms in the country, we are committed to creating value for investors and customers by launching our special stressed asset fund with an outlay of Rs 8,000 crore, in partnership with Nisus. We believe that growth should be equitable and we seek to help developers with a crucial line of funding to help close their projects.
Any festive offerings that you are planning?
The upcoming festive season offers a unique opportunity to further revive post-pandemic customer sentiments. We are delighted to inform you that we are offering fully-fitted out senior living homes with dedicated nature-rich areas, meaningful facilities, and strong on-site medical services. We have partnered with Manipal Hospitals and Portea to cover all home healthcare & emergency needs of the residents.
The project is extremely affordable, and has the most flexible pricing in the segment. It is available for purchase as well and renting – with plug-and-play units, and free exclusive on-demand concierge services for 2 whole years. We hope that this festive season, this project lights the lives of many elderly citizens who struggle with finding a safe, seamless and rewarding living experience in the Bengaluru city.
Considering your bullishness, how many projects are in the pipeline across your portfolio and the likely investments around them?
The Indian real estate space is brimming with opportunities as demand continues to outpace supply and as one of the leading contract developers in the country, we are at the forefront of making available the widest selection of quality projects for our customers and have been witnessing 40% year-on-year growth. Currently, we have 23 projects spread across 15 million square feet that are under development with an investment outlay of Rs 2,000 crore. The same is expected to close by 2025. It is the contracting order book from residential, commercial, oil refinery and building factories with a majority of the project spread across Karnataka, Tamil Nadu and Delhi-NCR.
How has the manpower scenario changed post reverse migration in the COVID-19 pandemic?
By virtue of our 70 plus years of experience in the construction business, we have built an organisation with the trust of thousands of our workers who wanted to grow along with the company and thus, we quadrupled our workforce count at a time people were losing their manpower. The BCD Group lays special emphasis on maintaining the highest standards of labour security, compliance and ensures timely payment to its workers.
This has been the foundation of the success of the BCD Group which has given us the chance to grow right alongside New India and pave the way for a smarter, future-ready realty landscape that caters to the ever evolving needs of the community.
What kind of opportunities do you see in the stressed assets market?
The tectonic shifts of the past decade have rendered several projects — particularly residential — unviable for developers. These projects have huge upside potential due to their presence in key locations, positive buyer sentiment and the need for focused players in the market by buyers.
To capitalise on this opportunity, we have launched India’s second largest stressed asset fund with an investment outlay of Rs 8,000 crore, to provide a much-needed post pandemic lifeline to pending projects, in order to create shared value in the realty ecosystem.
As per research done by the Confederation of Real Estate Developers’ Association of India (CREDAI), Colliers India and Liases Foras in March 2022, the unsold inventory across the top 8 cities in India is estimated at upwards of 900,000 units with primary reasons being non-availability of necessary development approvals, liquidity crunch, sales not being up to the projected mark and operating cash flows of property developers today under significant stress. These things have resulted in slow progress or stalled projects and lack of interest servicing ability. Around 70% of stressed projects just require recapitalisation or last-mile funding to get back on track. This is the market opportunity we aim to fill to capitalise on with our stressed asset fund and infuse the much-needed liquidity into the market.