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Anjana Chandramouly

Negotiations on with construction cos for mass housing

Bangalore April 3 The shortage of affordable homes is a serious concern, and the Government should come out with a policy soon, said Mr Bhaskar N. Raju, Executive Director, DivyaSree Developers (P) Ltd, a Bangalore-based real estate company.

"Production in this sector follows a 36-month cycle, and in those terms, we are actually expecting changes of today to reflect in 2010."

To address the issue of affordable homes for all, the company plans to launch a separate vertical, the announcement for which would be made by end-2007, said Mr Raju. "We are negotiating with large construction companies which have mastered the technology for mass housing in this regard," he said.

Two brands would be created — one for mass housing and the other for high-end projects, he said. The name of the brands and the partners are currently under study internally, he added.

The focus would be on mass housing, and land acquisitions are being made keeping this in mind, Mr Raju said. The company, which has about 340 acres under development, is also in the process of acquiring 400 acres of land in Bangalore, Hyderabad, Chennai, Kochi, Pune, Kolkata, Mangalore and Mysore.

DivyaSree also has hospitality projects under construction — one at Raidurga near Hyderabad, and another at Chennai. The Raidurga project is a combination of retail and hotel — a 15-floor hotel above two floors (over 1 lakh sq ft) of retail space. The Rs 490-crore project "is not a destination mall, but a utility mall," said Mr Raju. The hospitality part of this mall would have 250 hotel rooms and 300 rooms belonging to the service-apartment category.

The second hotel would be located on the East Coast Road, 12 km before Mahabalipuram near Chennai, he said. The Rs 210-crore, 120-room project would be spread over 12 acres. "The company would own the real estate and business, but the management would be outsourced for both these projects," he added.

The company has also acquired 100 acres near the new international airport complex at Devanahalli near Bangalore, "the use of which is yet to be decided; but the campus, as of now, could house an IT park and residential complex (villas and apartments), and would be started in 2008," Mr Raju said. "We will make the final decision after the airport is opened," he added.

Foray into other cities

"Chennai would be our largest focus in 2007 and 2008. There will be a drastic change in the residential side of Chennai's real estate market in the next three years," he said.

DivyaSree currently has two projects in Chennai, and "we are in the process of acquiring more land there," Mr Raju added. In Kochi, it would launch a 50-villa project on the waterfront. It would also develop residential and commercial projects in Hyderabad on about 9 million sq ft in the next five years, he said.

Evaluating IPO

"We will evaluate IPO, but within 24 months from now," Mr Raju said, adding that systems were in place to prepare the company towards that direction. "But we want to wait and watch."

On the industry's outlook in the future, Mr Raju said, "Consolidation will be the order of the day, say two years from now. The industry will become more transparent in this time and that's when mergers and acquisitions will kick in. Automatically fly-by-night operators can be removed." In this direction, the steps taken by the RBI are commendable, he added.

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