`Real Estate Market A Cyclic Movement': Chintels India, Company Joint MD, Prashant Solomon
By Ni3, Section Gurgaon Real Estate Property
Posted on Sat Sep 06, 2008 at 02:13:08 AM EST
Chintels India has tied up with Sobha and QVC Realty to develop a group housing project and a township in Gurgaon. While foraying into residential real estate, company joint managing director Prashant Solomon is optimistic that the real estate market will again witness boom after the present correction phase. He spoke to Our Correspondent. Excerpts from the interview:
What kind of tie-up you have with Sobha Developers and QVC Realty.
We have tied with Sobha and QVC for developing a township and a group housing project in sectors 106 and 109. Of the 200 acres of land, we have allocated 148 acres for township and the rest for group housing. QVC Realty is participating only in the township.
In terms of million square feet, 12 million sq ft space would be residential development. This includes 6.5 million sq ft of township and 5.5 million sq ft for group housing project. In this project, we own the land and Sobha will develop the project.
Apart from residential real estate, which are the other areas that you are operating into?
We are developing five commercial buildings in sector 114, Gurgaon.
Will you be selling spaces or giving them on rent?
We are looking for a lease model where retailers will book spaces with us. For office spaces, the occupants will be provided a ready-to-move in facility with complete Wi-Fi connectivity and other amenities required to start- up a business.
You are developing your commercial projects on green building concept. Are you also trying to get LEEDS certification?
Yes, we are designing our premises on those standards, but everything is at a planning stage. But things like design of windows, also the material you are using, type of ventilation, type of water recycling you are using etc also matters. All these in place have to match the standards set by LEEDS.
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Is it easier to get a LEEDS certification for residential premises or for commercial ones? Are standards for both the same?
It is easier to get the certification for commercial buildings. The requirements for both of them are different. In a residential building, it becomes difficult because then we have to customize as per the customer's requirement. When we talk about LEEDS rating, it is usually for the commercial buildings.
For example, the use of recycled water for the flush system is to save fresh water, the use of air-cooled system is to save cost and energy on air-conditioning in the building. As developer and designers, we should provide fresh environment to our clients.At times, when an MNC is looking for a space on rent they go for a gold rated building. That is their pre-requisite before settling down. Likewise, malls have much more of maintenance cost.
Rents are rising due to the high demand. Retailers look for a space on rent. What can be the reasons for this?
I think that more and more companies are looking for renting out spaces. And developers are following the lease format now. So rentals are going to increase. There is an acute shortage of spaces in Delhi. Land is becoming rare and expensive. Plus the sealing drive in Delhi is adding to the growth of rental market of Noida and Gurgaon.
MNCs today want offices in Noida as well as Gurgaon. They want various centres of operations across NCR. It is a simple logic that the rentals will keep on increasing.
Tell me about your commercial projects?
We are developing offices, retail spaces separately, and a mix of both at sector 114 on five different plots. Mix developments will not be a mall. It will have offices on upper floors. The ground floor will have shops and restaurants.
Why have you chosen sector 114 for developing your commercial projects?
We had land over there. Apart from this factor, the sector has location advantages. We are situated at a zero kilometer distance from Delhi and to the new upcoming airport. We are touching Delhi border. It is much better than any other place in Delhi. The newly proposed Dwarka Expressway coming from sector 22 of Dwarka is going to cross from our location.
As you said earlier, most developers are giving out space only on rent. This generates a regular income. Secondly, MNCs does not want to settle for a longer horizon. So they hire space for a period of some 15 or 20 years. So is this the reason for you leasing the spaces?
We have dealt with several tenants till date in our existing office buildings. Big companies have restrictions and requirements. Their parent companies do not allow them to spend huge amounts on buying space. They save their investment cost and reduce risks as they are coming to a foreign land. They are not sure of the return on their investments. So they try to minimise the risk on investment.
Have you decided on the price and rates in your projects?
It is too early to comment on that.
Is correction really happening? Are the prices really coming down? What are your views?
The prices are lower than they were in the recent past. There is a visible slowdown in the market. But this works in cycle. But in terms of investment, one should invest when the market is low. So this is a good time to invest. This is a good time to enter into the market. We are launching our project at a time of slowdown. So when the cycle revolves and prices will again rise, our project would be ready for sale. And then we gain maximum profit.
So when do you think that prices will rise again?
It should happen within a year or so.
What is your total investment on your projects?
For our own projects that we are doing only as Chintels, we are investing around Rs 1,000 crore. This includes the cot of land and construction. The project value for the JV is around Rs 3,000 crore. Sobha developer is going to invest the amount. We only own the land.
How are you going to fund your projects?
We are looking for PE funds and banks to finance our projects.
Source: www.expressestate.in 06/Sep/2008
