Hiranandani Group's Holistic Approach to Construction
How do you see the market scenario of Indian real estate industry with the implementation of RERA and GST?
We have come a long way since the stake holders in real estate, especially builders, tried to make self-regulation work. As of today, the Real Estate Regulation Authority (RERA) is a reality, and the challenge for builders after the implementation of RERA, is to transact their businesses in a way that is different: it has to be corporate-friendly, transparent, and professional. The advantage of these three will accrue to the home buyers, who will get their promised homes on the promised date.
Post RERA, the new scenario is where all developers and builders will have to follow financial discipline. They will have to make sure that the escrow account must ensure for the project it is meant. There should be no transfer of funds meant for one project to another. Effectively, this is a positive measure, as it will ensure sufficient funds for the projects to get completed and timely delivery of flats to the home buyers.
To ensure that this happens smoothly, the industry needs to move ahead, from ‘ease of doing business’ in ensuring by setting up single window clearing mechanism for getting mandatory clearances from various central and state authorities. Secondly, authorities must ensure time-bound completion of infrastructure like roads, water, and electricity supply as well as local transport system so that the right sort of urbanization takes place.
“High percentage of stamp duty, taxes and other duties which have not been subsumed under GST may lead to inflationary impact on Real Estate under GST. Developers fraternity seems to be upset with the fact that the GST do not subsumes other levies, municipal local taxes and stamp duty at the individual state level- and real estate is an industry that has a multiplier effect on the GDP, enhances employment, works as an economic driver for the nation and is important from many aspects. We expected GST to replace all taxes, levies and duties,that not becoming a reality is something that will result in inflationary pressures.”
What opportunities do the PM’s initiatives ‘Housing for all by 2022’ and ‘Smart Cities’ offer to Hiranandani?
There are a lot of positive sentiments in the country regarding the two initiatives as they aim to address the long-pending needs of the Indian economy and the Indian people. The framework of both is good, but implementation and the speed with which the implementation takes place, will be the real clincher, that is, whether they will remain just ‘initiatives’ or will they make any difference? From the real estate perspective, both initiatives have great potential, and we hope that both will be implemented in the right way so that they become truly successful.
Apart from the luxury segment of real estate, which the Hiranandani brand is synonymous with, we are also moving into homes for the aspiration-driven segment, and are seriously considering to create houses in the affordable segment as well. Given this game plan, both of the above initiatives will work for us, our Group Companies will get opportunities to create infrastructure, and will also create houses under the Housing for All initiative. So, I see both the initiatives having the potential for an ideal situation wherein opportunities will arise not just for us, but also for industry players across the spectrum.
What is your company’s current business growth?
We have seen enhanced demand for commercial real estate since mid-2015, and it has grown further in 2016 and promises to keep growing. At Hiranandani Estate, Thane, we concluded with Tata Consultancy Services (TCS), the largest such deal for commercial real estate in 2015; we have seen the positive impact it had on residential real estate through 2015-end and in 2016. In Panvel, we have the largest chunk of commercial realty across the Mumbai Metropolitan Region (MMR) being constructed. This is in keeping with the trend in the Indian corporate sector, which is going in for expansion and consolidation through re-location. In Mumbai and the MMR, we are witnessing this at Thane and Panvel, with the obvious impact on demand for residential real estate in both the locations. Our strategy has been simple: projects should have global standards and offer excellent quality - and it hasn’t proved wrong so far.
What important projects are in hand currently, and what innovative construction practices is the Group deploying to execute them within set time and cost targets?
The Mixed-Used Integrated townships at Powai and Thane, which have made ‘walk to work and walk back home’ a reality, are witnessing new projects and new phases being launched. Moving on to the next stage of real estate development, my recent initiative is Hiranandani Communities. While I continue to be the Co-Founder and MD of Hiranandani Group, my new ventures under the Hiranandani Communities label include Hiranandani Fortune City, Panvel; and Hiranandani Parks, Oragadam, Chennai - both are on-going township projects. Similarly, Hiranandani Signature designated as India’s first International Financial Service Centre (IFSC) is the commercial realty offering at GIFT SEZ, Gandhinagar, Gujarat. An industrial township in Pune is the next big thing in the pipeline; as are tourism-related projects in Khandala and Alibaug; while another project awaits on the drawing board, located in Nashik.
When it comes to innovative construction practices, the logic is simple: build as per global standards, using cutting-edge technology, and good quality construction material. This has been the ‘magic mantra’ which has built integrated townships that are aesthetically pleasing and provide high-quality amenities as reliable infrastructure for India’s growing young and affluent population and corporate sector consumers. The construction quality ensures that the projects speak of exemplary choice of location, amenities, and infrastructure.
As regards time management, there is no magic mantra – plan properly, execute as per the schedule – that is the only thing that works. Proper management of on-going projects is the only way to ensure that cost overruns are avoided; this requires delegation to mid-level management that are empowered to handle the situation.
Hiranandani is active in SEZ projects too. Please elaborate.
We have created a SEZ in Powai (Kensington) for the IT and ITeS sector, and are also working on ‘Signature’, a commercial building within the IFSC/ SEZ section of GIFT City in Gandhinagar. In Panvel, Hiranandani Fortune City will include Hiranandani Business Park, which will have a SEZ section.
The Indian Government, over the years, has laid the legal framework for creating SEZs. It has supported Indian business in global growth opportunities through marketing activities in global markets. From the perspective of the Indian Government, in recent months, we have seen a push in two initiatives: ‘Make in India’ and ‘ease of doing business’. From a business perspective, these are aspects which need to be in place for SEZs to succeed. From a real estate developer’s perspective, the ‘successful SEZ’ concept is all about ensuring a global outlook and global standards - from planning to execution to running the SEZ and also proper maintenance of the SEZ – which is our ‘Magic Mantra’ too.
What is your Group’s contribution to green construction in its projects?
Sustainable Development is all about taking an eco-friendly approach towards construction. It involves making intelligent usage of natural resources, ensuring least amount of damage and wastage while constructing, and also making minimal impact on the environment while using the completed project. The catch-word ‘Green Construction’ is about creating a project that is set amidst green spaces as opposed to constructing spaces and laying out green spots in between them! Being eco-friendly includes community living that strives to protect and preserve the natural environment. Construction material that is eco-friendly is an integral part of green construction. In all our projects, we strive towards sustainable development.
The country sees more high-rise constructions. What are the vital aspects in terms of technologies and mechanization while planning tall buildings?
As cities gear up to cope with the increasing population, the tall building may well become the new normal, not by choice, but by default. No large city, which has a growing population to accommodate, can afford not to go tall. My Group Company has created what was considered at the time, the world’s tallest residential skyscraper - 23 Marina at the Dubai Marina in the U.A.E. Our high-rise projects in India have also been success stories.
Challenges are easily met when you follow the twin Magic Mantras of ‘global standards’ and ‘quality control’. The higher you want the structure to rise, the more deep and more sturdy the foundation needs to be. Once the structure rises amidst the clouds, it needs to have been scientifically designed so as to successfully meet weather-related challenges such as ‘wind shear’ that a high-rise structure entails. For creating a high-rise structure, modern technology has to be leveraged in order to ensure that the construction gets completed at a quick pace, while ensuring high quality standards.
According to a report, tier-II and tier-III cities are being reckoned as the growth engines of the future. What business opportunities do you see in these cities?
I do not see any major difference when it comes to a project in any of the Tier 1 or metro cities vis-à-vis in a Tier 2 or 3 city, barring that of the size and the price-point. In Tier 2 and 3 cities, there are challenges which are different from those in Tier 1 and metro cities, the point being that both segments have their unique challenges. There is a huge scope for future growth in Tier 2 and 3 cities, simply because in the past couple of decades, the focus was on construction in Tier 1 and metros. The question one needs to answer when talking about ‘growth engines of the future’ is the new developing areas adjacent to Tier 1 and metro cities and projects being done in a Tier 2 or 3 city.
From my company’s perspective, we have done extremely well in Mumbai, are doing well in Thane, and the future is bright when we look at the potential that Panvel offers. I would not define these three locations as Tier 1, 2, and 3, but the logic is almost the same. Existing ‘star’ real estate locations (metro or Tier 1 city) will have a different growth model as compared to Tier 2 or 3 city, but we will see growth in all segments and across all locations. From the perspective of our Group Companies and our on-going projects, we are doing extremely well in all three segments (Tier 1, 2 or 3), and we hope to have the success story continue into the future.
Published on:
02 June 2017
Published in: NBM&CW June 2017
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