The Hindu Business Line : `Maintaining data bank will bring transparency in realty'

Bangalore March 28 A research-based data bank prepared by a third-party agency should help the real estate industry bring in transparency and curb speculative market.

Mr P.N.C. Menon, Chairman, The Sobha Group, said, "When the real estate industry does well, speculators get in, and create the stock. Naturally, land prices tend to go up, and consequently apartment prices too go up." A third-party agency should gather information from all developers, and table it on a regular basis, "say once a month," he said.

"The statistics on the industry would help us know trends like how much land is sold month-on-month." This will bring in some transparency, Mr Menon added.

On the steep prices of properties, he said that in the last financial year, there has been a dip due to speculators offloading the stock after having failed to command their price.

He, however, said no definite figure could be ascertained due to lack of organised data. Mr Menon maintained that genuine demand, propelled by strong economic growth, helped the industry grow, also bringing in price stability.

`SEBI move welcome'

SEBI's recent move mandating property developers to declare their land bank with proper title proof was a welcome one, he said. The company had complied with the requirement, he said; "When we filed our draft IPO prospectus we had given details of the inventory," he added. Sobha had tapped the capital market in December.

At the time of filing the prospectus, the company had land reserves of 2,747.1 acres in seven cities, and land arrangements of 3,373.28 acres in three cities.

On funding future projects, Mr Menon said that his company had no plans to mobilise any additional funds, as it had adequate internal resources.

The company would look at private equity, but would tap the source only if necessary and only for "project-based private equity".

Backward integration

Explaining that the company works on an end-to-end product strategy, Mr Menon said, "We have a unique backward integration model, wherein we have in-house resources to complete the project from architecture to finish. It includes a concrete block-making plant, metal and glazing factory, interiors and wood working factory, and mechanical, electrical and plumbing division."

Development projects

The group would soon start work on a five-star hotel in Bangalore in the central business district area, which will mark its foray into the hospitality sector. "The hotel will have 200 rooms, and would be completed before end-2009," he said. The company is yet to decide on whether to award management contract to any leading brand or operate it by itself, he said.

The Sobha Group would soon extend its boundaries beyond Bangalore to Kochi, Thrissur, Coimbatore, Hosur, Chennai, Mysore, Mumbai, Delhi, Pune, Jaipur, Hyderabad, Mangalore and Goa.

The company will start work on its 500-acre hi-tech city project in Kochi soon; and work on a township project at Thrissur has already begun. "We are also constructing five-star hotels in Kochi and Thrissur," Mr Menon added. According to him, before end-2007, projects will be launched in other cities too.

Besides, the company has started work on a township project near Devanahalli, which will have over 300 villas. "Phase 1 of this project — 61 villas — has been booked fully," Mr Menon said.

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