Currently Residential market has a huge demand, that too there is a tremendous scope for affordable housing. This goes along with our Hon’ble Prime Minister’s vision of “Housing for All by 2022”. The office market demand is also growing rapidly, but for sustaining this growth depends on various economic factors. But I expect a decent growth in the next five years.
Warehousing and Logistics development is the new entrant and will have a good growth. Retail malls are also likely to have a good growth in the next five years. But the clear winner is going to be affordable housing.
M Murali, Managing Director, Shriram Properties shares his view with Sandeep Sharma about his company, ongoing and upcoming projects, emerging trends, market scenario in Bengaluru, need to streamline Construction/Project Finance, green building development, importance of Single Window clearance system, impact of Real Estate Regulatory Act, 2016 (RERA) and how to sort out the housing deficit in the country. Edited excerpts...
Could you brief us about your company’s footprint in the real estate sector?
Shriram Properties, the property development arm of the Rs 90000 crore financial giant Shriram Group, Chennai, is a multi-crore company with nearly Rs 25000 crore business across the country. The company has so far delivered over 12 million sq ft of residential and commercial built up space across the country and another around 60 million sq ft is under various stages of development.
How did your company fare so far in FY2016-17 in terms of business generated, growth rate and your projects completed/announced?
We have been on track and we continue to build keeping transparency in mind. We always want to ensure that our customers continue to trust us in every possible way. We are working on many new projects and we will announce these when we are ready and the time is right.
Could you provide us insight about the emerging trends in the Indian real estate sector? According to you, which segment of the real estate will be the top runner in the next five years? And Why?
Currently Residential market has a huge demand, that too there is a tremendous scope for affordable housing. This goes along with our Hon’ble Prime Minister’s vision of “Housing for All by 2022”. The office market demand is also growing rapidly, but for sustaining this growth depends on various economic factors. But I expect a decent growth in the next five years. Warehousing and Logistics development is the new entrant and will have a good growth. Retail malls are also likely to have a good growth in the next five years. But the clear winner is going to be affordable housing.
How is the market scenario shaping up in Bengaluru? What kind of challenges are you facing in improving your project sales?
Bangalore has a steady demand for real estate thanks to the IT sector. Also, the city is growing with newer areas being developed, say for example, Budigere in the East. However, there is a huge demand on the infrastructure and we are hoping this issue will be resolved.
Brief us about your ongoing and upcoming projects in the residential and commercial segment?
Following are the ongoing projects in the residential segment in Bangalore:
Currently we have 8 projects in Bangalore in various stages of development. There are 4 ongoing projects in all in Coimbatore, Chennai & Visakhapatnam. We have launched a 386 acre project in Kolkata very recently to move out of South & create a mark for Shriram Properties in other parts of the country. In terms of upcoming projects, we are working on many across cities.
What’s your take on the need to streamline Construction/ Project Finance in India? How do you meet your funding requirements?
We need affordable long term capital. It can be through FDI or even long term bonds. We need to look at various options of making cheaper funds available for this sector.
One of the forerunners in Indian Real Estates, Shriram properties is a trusted and highly credible developer having attracted huge PE investments. World majors Walton street, Starwood capital, TPG Capital, TATA Opportunities Fund, HYPO, Sun Apollo, ASK, Motilal Oswal, Amplus, ICICI Prudential have invested in Shriram Properties - aggregating to US $ 435 million.
What’s your take on sustainable construction and green building development? What’s your contribution towards green building development?
We should focus on making Green buildings and this is the future. Green initiatives are undertaken by Shriram Properties for eco-friendly development. Two projects of Shriram Properties, i.e. Shriram Luxor on Hennur Road and Shriram Greenfield at Budigere Cross are eco-friendly residential projects. Both the projects have been pre-certified Gold by IGBC (Indian Green Building Council).
In case of Shriram Chirping woods, which is a 16.5 acre project, the construction is only on 5 acres and the balance 11 acre will be pure green open space. We take every possible measure to preserve the natural ecosystem in & around the project like for instance protecting the water bodies.
Could you comment on the need and importance of Single Window clearance system for real estate projects?
Real estate Industry is currently either over regulated or not properly regulated. The Governments have to clearly define their objectives covering consumer’s interest, the housing needs of the concerned cities (need for the cities may vary from city to city). After seventy years of independence, still the housing shortage is about 20 million homes. If we need to address the Housing shortage, Government needs to take a serious view on this and accordingly define the laws. It will be better, if we have single window clearance, but at least we should have clearly defined laws for the real estate projects.
What can be the impact of Real Estate Regulatory Act, 2016 (RERA) on the real estate companies and the buyers at large?
RERA will bring down the number of players in the industry on one side and on the other side will have few good quality players. RERA will discipline the industry. But for the RERA and the industry to be successful, there needs to be some correction on the current RERA bill.
Is there any hope for common man to buy home at affordable rates? What needs to be done to sort out the housing requirement of the masses?
Consumer will look for better product and better service. But typical Indian consumer mind may not be willing to pay a good price for a better service. Overall outlook for the industry looks very bright and the growth can be at a rate of over 30% YoY for at least next five years.
Indians believe in owning homes and this act as security to them. Hence I doubt whether rental housing can be a solution. Also given the yield Vs cost of funds, it may be difficult for rental housing to become successful. This can become success when the gap between the yield and cost of funds reduces. For the real estate not to become expensive, we need to focus on infrastructure growth.
As the country gears up to develop 100 Smart Cities and is focusing on setting up manufacturing hubs as part of ‘Make in India’ campaign. What kind of opportunities do you see for your company?
Our Prime Minister’s vision of Make in India can bring solution to a major level. We may have to focus on industrial and agricultural development for our long term sustainability. While creating the city design, we need to keep these two factors in mind.