The Hindu Business Line : ‘Realty headed for a further 10% correction’

Mr Brotin Banerjee (right), Managing Director, Tata Housing Development Company Ltd, at the unveiling of sand sculpture replica of Aquila Heights created by Mr Sudarshan Pattnaik (left), World Champion Sand Sculpture artist at Garuda Mall in Bangalore on Wednesday.

Our Bureau

Bangalore, Aug. 13 The real estate market across the country is not as robust now as it was a couple of years ago. The industry has seen a correction of 15-20 per cent across markets, and it would take over a year for it to recover, said Mr Brotin Banerjee, Managing Director, Tata Housing Development Company Ltd, a fully owned subsidiary of Tata Sons Ltd.

He added that there would be a further correction of 10 per cent in the coming months. Big developers are holding on, he said, because they might have large developments.

The company is not looking at getting listed, but the focus is on expediting existing projects and executing new ones, Mr Banerjee said.

“We want to provide a truly differentiated consumer experience,” he added. This year, the company plans to develop about 10 million sq ft of space.

Residential Project

Tata Housing announced its second residential project in Bangalore – Aquila Heights, which when completed will be the city’s tallest residential tower, on Wednesday. The tallest of the three towers planned would have 32 storeys and would stand at 105 metres above the ground and each tower would come with a helipad.

The six-acre project, which would have about 6 lakh sq ft of developed space, would take three years to complete. The apartments would be about 1,400 sq ft (for two bedroom apartments), 1,600 sq ft (two-and-a-half bedroom apartments) and 2,100 sq ft (three bedroom apartments). The pre-certified green building project will have 89 per cent open space.

Mr Banerjee said of the 240 apartments planned for the first phase, 130 have been pre-sold without any advertisement support. “The project was soft-launched in April, and we had to restrict sales till the formal launch. The apartment cost has gone up from Rs 3,331 a sq ft in April to Rs 4,250 a sq ft now,” he added.

Looking Forward

He said Tata Housing hoped to be a $3 billion company by 2012. The company, which had developed about 15-20 lakh sq ft in 20 years, has plans to develop about 200 lakh sq ft in four years. The projects would be a mix of residential, hospitality and commercial spaces, and would be located in nine metros and tier-I cities. “The land – about 150 acres – has been acquired, and investments have been tied up. About 60 per cent of the land acquired would be joint development or joint ventures, and the rest would be outright purchase for the company,” Mr Banerjee said.

“Many land owners and small developers want to tie up with us, thanks to our brand name,” he added. Sourcing finance from banks is still not a problem, he said.

“There are internal accruals, customer bookings and equity infusion from Tata Sons too,” he added.

IT Park on the anvil

Tata Housing plans to launch two integrated townships of about 50 acres in Kolkata and Chandigarh around Diwali. There are plans to launch a few projects in Bangalore, and the company hopes to commission its gold-rated green IT park in Bangalore, Xylem, by October. Investments for this IT park is about Rs 125 crore, and it would have 5-6 lakh sq ft of developed space.

“We are looking at acquiring land parcels in Bangalore,” Mr Banerjee said, adding that land prices in the Devanahalli area are witnessing a dip. “What was available for Rs 10 crore an acre two years ago is being sold at Rs 6 crore an acre,” he said.

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