Well positioned to scale both our commercial & residential businesses: Rishi Raj, Max Estates | The Financial Express

Well positioned to scale both our commercial & residential businesses: Rishi Raj, Max Estates

In an exclusive interview, Rishi Raj of Max Estates talks about the NCR’s realty market and shares his business outlook and growth strategy.

Well positioned to scale both our commercial & residential businesses: Rishi Raj, Max Estates
Over the last 4 years, we have developed a portfolio of three office assets in Delhi NCR.

As a progressive developer backed by a successful track record of developments in the commercial space, with the strength of differentiation in design, end-user experience, and the overall impeccable governance of the Max Group, we are well positioned to scale both our commercial and residential businesses and deliver substantial value to all our stakeholders, says Rishi Raj, COO, Max Estates Ltd.

In an exclusive interview with Sanjeev Sinha, Mr Raj talks about the NCR’s realty market and shares his business outlook and growth strategy. Excerpts:

What is your outlook for the Delhi-NCR housing market, which has been plagued with default in deliveries by several developers — big and small — and unsold stocks?

Over the last few years, the residential sector has undergone various structural reforms like introduction of RERA, introduction of IBC and many other policy level reforms. These have improved transparency, enabled access to quality information and drove significant overhaul in the competitive landscape, as is evident in more than 2/3rd of the incumbent developers going out of business while solidifying the presence of credible corporate developers. As a result, the market share of 11 listed players in India’s six cities has risen to 20-22% currently (FY22) from 14-16% before the pandemic struck.

In parallel, rise in affordability levels driven by low interest rates, rising income levels and significant correction in unit level pricing in real terms over last many years, clubbed with multi-pronged policy incentives, have revived the underlying demand for the housing sector. Covid has played its role in shifting back the balance from sharing to owning mindset when it comes to housing, even among younger generation. And, it also has had an impact on consumer preference for communities which provide a quality ecosystem of amenities anchored around holistic well-being of their residents, a need that institutional developers are better equipped to fulfil.

We are keeping a close tab on global political and economic developments and their impact on inflation and interest rates, as well as commodity prices. The demand for housing has sustained, absorbing price increase by developers potentially due to end use being at the core of upsurge in demand vs. speculative investments. The growth of sales of residential units in Delhi NCR continued in Q3 2021. In 9 months of CY 2022, NCR’s residential market maintained demand momentum with total sales of 40,115 units, ~2x of last year and the highest sales clocked since 2013. Developers, being cognizant of a strong home buying appetite, have been augmenting the supply of new residential projects since the past few months. In the 9 months of 2022, 38,991 new residential units were launched in the NCR region, ~3x of last year clearly indicating robust performance after exhibiting resilience in 2022.

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As a progressive developer backed by a successful track record of developments in the commercial space, with the strength of differentiation in design, end-user experience, and the overall impeccable governance of the Max Group, Max Estates is well-positioned to scale both its commercial and residential businesses and deliver substantial value to all its stakeholders.

What are the key trends being witnessed in the office market of NCR?

From an era where three biggest drivers for success of real estate projects were ‘location’, ‘location’ and ‘location’, I strongly believe that in addition to ‘location’, the overall ‘product quality’ and ‘experience’ within the community have become key drivers of differentiation.

This shift has been further accelerated by Covid. In recent years we have witnessed an increasing trend of flight to quality, with progressive companies upgrading to developer-owned Grade A+ office spaces and willing to pay premium for quality spaces. Organisations are choosing well maintained contemporary office complexes that offer an ecosystem of spaces and amenities, which is key to enabling community, collaboration and innovation. With limited supply to cater to such demands of quality workplaces, renewals of existing tenants are also at an all-time high.

In the post Covid-19 era, with organisations also looking to expand their geographical diversification, several conglomerates are exploring the hub-and-spoke model, also reducing the distance between home and office. This redistribution of demand has yielded an advantage to Delhi NCR and it is emerging as the preferred location for core office set-ups even within the hybrid workspace model. As a Grade A+ office space player that provides an unparalleled experience, Max Estates has certainly emerged as a strong player in the market. Our current developments Max Towers and Max House have witnessed a surge in occupancy and demand, both now being 100% leased. Our upcoming development Max Square also has a strong pipeline of enquiries from prominent corporates.

Max Estates has a good presence in the office segment. How have your operational office buildings been performing?

Over the last 4 years, we have developed a portfolio of three office assets in Delhi NCR – Max Towers, in Noida, Max House in Delhi, and Max Square on Noida Expressway. While the first two are delivered and 100 percent leased at 25-30 percent premium to micro market, the 3rd development is under construction with completion on track by the end of CY 2022. In total, this comprises a portfolio of 1.5 mn square feet.

Max Estates has brought a difference to the real estate industry, with Grade A+ developer managed commercial buildings, built on our unique concept of WorkWell. With the changing role and purpose of offices in the new normal, we adopted an agile approach to the new hybrid model of work and created a holistic confluence of spaces that enable collaboration, innovation, and community, while ensuring the physical and emotional health and well-being of our tenants is kept in focus. Our developments uniquely weave in elements of art and nature while ensuring world class standards of safety protocols, air filtration and natural light, which, as proven scientifically, has long lasting positive impact on overall productivity levels. Each of our developments has a ‘culture manager’, who focusses on curating events like inter company sports tournaments, open to sky movie shows, talk shows, yoga classes and many more, for tenants on a continued basis, which has been a big pull factor for employees looking forward to come to office every day.

We strongly believe that ‘supply creates demand’ and with our developments, we have been successful in redefining what a consumer can expect in terms of ‘quality of experience’ when working out of a commercial office development. For example, Max Towers in Noida has attracted top notch clientele who have made Noida a base for their front office, paying rentals higher than Gurgaon – the last lease at Max Towers was done at INR 130 psft per month. While location played an important role, the quality of the product and more importantly the word of mouth on overall experience got tenants to move out of offices from different parts of Delhi NCR to Max Towers and Max House.

What is the status of the new office projects which you are constructing?

At Max Estates, we are looking forward to creating more spaces that focus on the health and well-being of our tenants, and also enable collaboration, innovation and community. Pioneering towards success, the pipeline for upcoming projects is strong, with Max Square on the Noida-Greater Noida expressway, and the second phase of our development Max House, in South Delhi, already underway. At Max Square, an ~11,000 square feet live central forest courtyard resides at the heart of the development, uniquely combining nature and work, and set to redefine the future of work by providing state of the art amenities to its users, whereas Max House is set to create a bustling campus environment in the midst of the capital, which allows its tenants to not just work, but interact, engage, flourish and grow!

In addition, we have won the bid for 2 land parcels of ~4 acres contiguous to Max Square development on Noida Expressway, which along with the existing development will translate into a mixed-use campus of ~2 mn square feet. Further, we have added 7.15 acre of land with development potential of 1.6 mn square feet of leasable area on prime Golf Course Extension Road, one of the primary demand vectors in Gurgaon.

With this our CRE portfolio is now overall ~4.5 mn square feet, and well diversified across Delhi NCR from Core to Greenfield developments.

Max Estates has announced a foray into the NCR housing segment. What are the company’s plans and strategy for the residential vertical?

Our purpose is to ‘Enhance quality of life through spaces we create’ and as a strategy we have chosen to develop premium commercial and residential spaces in Delhi NCR as our playground. Our guiding philosophies of WorkWell and LiveWell are rooted in ensuring the holistic well-being of our stakeholders with close attention to their physical, social, emotional, and spiritual well-being, which will be reflected in all our upcoming residential and commercial developments. We aspire to add 1 mn square feet on an average every year each in commercial as well as residential space. With the current pipeline we expect to end FY 23 with a portfolio of 7-8 mn square feet of delivered and development potential.

On the residential front, early this year, we have acquired a 10-acre prime land parcel with ~ 1mn square feet of development potential in Sector 128, Noida, on the Noida Expressway that will mark our beginning in the residential real estate segment. We are also in active dialogue to close a joint development opportunity for our first residential development in Gurgaon.

We have noticed that Max Estates has acquired some distressed land and projects. Will you continue exploring this option?

We have a strong pipeline of opportunities under evaluation in both commercial and residential spaces in Delhi NCR, including 2.5-3 mn square feet of acquisition through the IBC process pending the NCLT approval. Delhi One, which we had bid for is, still under NCLT hearings. The committee of creditors voted in favour of our plan and declared MEL as a ‘Successful Resolution Applicant’. Our resolution plan is awaiting final clearance from the NCLT courts.

Yes, as a part of our strategy to add 1 mn square feet each in CRE and Residential space, we continue to evaluate opportunities across key micro markets in Delhi NCR from multiple sources, including distressed opportunities, which have a potential to truly transform customer experience.

Is Max also planning to foray into other segments of the real estate sector such as shopping malls, warehousing, data center, co-living, and co-working?

If history has taught one lesson in real estate, it is the ‘power of focus’ as real estate is a very micro game.

We, as a part of our ‘one region-multiple asset class’ strategy, would like to focus, in the near to mid term, only on commercial office and residential-led developments, including opportunities like Delhi One which lend themselves well to integrated/mixed use developments.

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First published on: 01-11-2022 at 16:50 IST