As Residential and commercial properties witness a slowdown, developers are diversifying by investing in businesses that could fetch good returns ahead, which in turn would spread the risk and build a new class of assets.
For instance, Mumbai-based RNA Corp-so far into residential and commercial development, is venturing into the hospitality business. The company plans to set up three hotels in Mumbai with an investment of Rs 800 crore.
"We want to own new assets which could give us steady income. Residential projects go out of hand when completely sold out," said Manoj John, vice president (Corporate Planning), RNA Corp. The company is planning to foray into lifestyle resorts and hospitals business too.
"We foresee tremendous opportunity in this business. Diversifying is a strategic decision as it would de-risk the business from the real estate cycle," he said.
Pune's Sahil group, which has assets worth Rs 500 crore, has been developing residential and hotel projects. It is now venturing into the business of managing hotels by partnering with a leading international hotel chain to run its hotels through management contracts.
"I am convinced that running hotels would be a lucrative business. Many developers are setting up hotels but don't know how to run them. We will manage the hotels for them for a fee and make money," Vinay Phadnis, chairman and managing director, Sahil group said adding that there was enormous opportunity in that line of business.
Delhi-based Vatika Group with assets worth Rs 12,000 crore, is already into residential, commercial, hospitality and a couple of restaurants in Gurgaon. It is aggressively rolling out restaurants in six different formats across key locations Ialatendu.
Source: Hindustan Times, Sep-20-2008
