The real estate market is slowly picking up in the metros and cities like Belgaum are also seeing a boom with the entry of big players. Puravankara is the latest to plan its entry into Belgaum by the end of third or fourth quarter of 2011 under its subsidiary Provident Housing Ltd.
AAB spoke to Jackbastian K. Nazareth, Chief Executive Officer of Puravankara Projects Limited. Jackbastian K. Nazareth has over 20 years of experience in real estate. The best part is the CEO hails from Belgaum, who completed his schooling from St.Paul’s and holds a Bachelor’s degree in Civil Engineering from GIT and an MBA from the Goa Institute of Management.
AAB ———-> A lot of leading real estate developers have announced their venture into affordable housing but two years forth the kind of activity, which should have been witnessed has ebbed. Whats the reason behind this?
Jackbastian ——–> There are many reason for projects in affordable housing not being able to take off, profitability being the main reason. Developers who had announced projects under affordable housing were amending their existing projects by reducing apartment sizes but without any reduction in costs thereby not being able to sell to the customers at a lower rate. Projects under affordable housing requires a focus and a long term direction. The design and development needs to be done based on value engineering of designs, architecture and need of the demographic in question. Merely reducing the living space will not appeal to the buyers. It is just not the ticket size but a whole gamut of amenities and specifications that make people buy the dream home.. This requires detailed study to be done right from the drawing board stage thereby maintaining the costs. It is just a matter of time before developers will start work on this segment
Provident Housing Ltd., is a 100% subsidiary of Puravankara Projects Ltd and is currently developing 5.69 msft from two projects in Chennai and Bengaluru of which phase I development is 2.65 msft. We commenced work in 2009 and will be handing over Phase I during Q2 of Financial Year 2011-2012. We are currently focusing on completing these projects and complete possession as per scheduled time lines and hence we had reduced the new product launches. Now with us having being able to construct and deliver, we are keenly evaluating new opportunities across various cities in India and will be announcing a few more new launches under ‘Provident’ brand in the next 12-15 months .
AAB ———-> How do you define affordable housing? what is your target segment?
Jackbastian ——–>Provident realizes the need for quality homes at an affordable prices developing cities and Belgaum is one of the cities identified. While efforts are on to acquire land, some discussions have reached final stages. Provident is a leader in the segment and defines Affordable housing as afford-ability to all stake holders, the developer and the buyer alike.
Our target audience is first time buyers. Youth as well as retired personnel are the ones who have purchased apartments with us. We are also seeing an increase in the self funded second home buyers too, who want to invest in a good property at an affordable price. In fact people from Belgaum, Hubli, Bellary, Mangalore have brought homes in the project in Bangalore.
AAB ———-> Kindly share some some details of the Belgaum project?
Jackbastian ——–>Depends upon the land acquisition size, Ideally looking at good mix of apartments, row houses and independent homes in the Provident brand to begin with.
AAB ———->Belgaum is seeing some great rise of prices in Real estate and also coming up of Gated residential communities and second homes your take on this?
Jackbastian ——–>Belgaum is one of those places that offers great value for money for real estate. The place has an amazing weather and is an ideal place for investment. It has some good educational institutes and is a nodal centre for the surrounding rural areas. It is also seeing some good investments in manufacturing and other allied industries and therefore is bound to be one of the important cities of growth for Karnataka. The focus on infrastructure is also improving. These become critical factors for real estate prices.
Gated communities are the order of the day. It gives the residents the choice of enjoying common amenities at shared costs. From our perspective, we have been developing large gated communities and have about 6000 homes in such communities, being built by us currently, in cities of Bangalore, Chennai and Kochi. These communities represent a form of urbanisation where public space is privatized. They differ from condominiums and secured apartment complexes because they include public infrastructures and spaces behind the gates, which can otherwise be used by everyone, such as parks. Our communities focus on exclusiveness, protection of families in a secluded environment, and leisure facilities such as private parks. Gated communities which were a rarity in two tier cities are seeing much acceptance. A Puravankara gated community has always stood out in terms of what we call as “joy of living”.
AAB ———-> What is the total area under construction in this segment and going fwd what is the area you plan to develop?
Jackbastian ——–>Currently we have launched 5.69 msft in both our projects in Chennai (2.23 msft) and Bengaluru (3.46 msft). Phase I of these two projects amount to 2.65 msft (Chennai – 1.50 msft and Bengaluru-1.15 msft). We will be handing over possession to the customers during Q2 of Financial year 2011-12
With respect to new launches, we will be launching one project of 6 msft in Bengaluru in the next 3-4 months and are actively evaluating opportunities in various Tier-I and Tier II cities which includes Belgaum.
AAB ———-> Do you see demand side as a constraint in this sector given the fact that projects are located on the fringes of the city where’s there lack of connectivity and infrastructure? What is the area that is still unsold?
Jackbastian ——–>This is a segment that has immense demand. We do not any signs of reduced interest from buyers in this segment simply because there is a need for homes for the demographic. At our end we evaluate projects based on infrastructure in the said geography and due weightage to various factors is given before we embark on the project. The sales that we have generated for both the projects bear testimony to this fact and we have left with around inventory of less than 10% in both the projects.
AAB ———-> What are yourmargins in the affordable housing segment and what has been your strategy to bring down transaction cost?
Jackbastian ——–>We are expecting net profit margins anywhere between 20%-25% for each project. Apart from the costs we are also ensuring no delays in completing the project thereby improving the margins both at the project level and the entity level. It is prudent to note here that a focused approach to this segment, with volumes and delivery brings a lot of promise.
About PURAVANKARA GROUP:
The PURAVANKARA GROUP was established in 1975, in response to the growing need for quality housing and commercial space in the metropolitan cities of India. Since then, the Group has grown to be one of the leading Real Estate Developers of the country, serving the needs of a discerning clientele.
The Puravankara Group with over 35 years of excellence in the upper end of the housing sector across various regions of the Country has projects in Bangalore, Chennai, Kochi, Coimbatore, Hyderabad, Mysore, Kolkata and Colombo. The Group also has a presence in Dubai in the UAE and business representatives in the United Kingdom and the United States. With a land bank of over 125 million sq ft, the Group has above 20 million sq ft of residential and commercial space currently under construction.