As more corporates enter real estate field, choice widens for property buyers

The presence of reputed corporates in the real estate sector provides an assurance of quality to real estate projects and the buyers are the biggest gainers from their entry, according to Mr S.S. Asokan, Executive Director, Shriram Properties Ltd (SPL), Bangalore.

He said SPL too, like many Shriram group companies, would become a public limited company but would wait for an opportune moment for that.

Speaking to Business Line in Coimbatore, he referred to the presence of large industrial houses such as the Tatas, L&T, Godrej, Murugappa, Mahindra & Mahindra etc in the real estate sector, which the Coimbatore-based LMW and Lakshmi Mills also are gearing to enter, which he said was ‘good for us' and `everybody would get a level playing field' and there would be ‘high standards of (corporate) governance'.

Mr Asokan said the fact that large industrial houses own land did not give them undue advantage vis-a-vis their competitors in the real estate business and it was only an ‘incidental issue'. But when corporates come into the real estate industry, ‘more and more good people would come to the industry and that would be real game changer for the entire country' and that's ‘how we are looking at'.

He said the real estate pie was so large that there was enough business even if hundred new companies enter the field.

Brand value

As big corporates already have a huge brand value, they would strive to protect their image which was good for property buyers who would have plenty of good choices.

The industry also would become more professionalised. In corporate entities, corporate governance would be good and the ethical values for which companies stood for would also reflect on the products they sold.

Mr M. Murali, Managing Director, Shriram Properties Ltd, said at present, only a handful of corporate players such as SPL itself were present, ‘shouting or struggling hard' to create new benchmarks or establish new norms.

When more established players enter the sector, buyers would be confident of making a safe choice since corporates would bring certain standards to the table.

Mr Asokan, referring to the presence of SPL largely in the South-Bangalore, Chennai, Coimbatore, Vizag and also in Kolkata, said the company focused on the Southern market because of its brand recognition and as it understood the market here better and the expansion in the future also would largely be in the South, barring exceptional opportunities elsewhere.

In the South, it would also focus on tier II cities such as Coimbatore, Madurai and Tiruchi. It was looking at Kochi and Hyderabad and the main thrust area was the middle and upper middle class segment and in the apartment size of 1,000 sq ft to 1,600 sq ft.

Price swings

The Southern market has not witnessed wild price swings, unlike in NCR or Mumbai, which has contributed to stability in the market.

He said the growth the housing markets in Chennai, Bangalore or Hyderabad had witnessed was fuelled by the IT sector's growth. But there were other growth drivers as well like the auto industry in Chennai.

Asked as to when SPL, which has several group companies that are listed, would go public, he said, “we would go public but would wait for an opportune moment”.

It ‘may not be immediately but two or three years down the line', as and when it sensed a good opportunity and the capital markets are ‘doing well' and asserted ‘ we sure will go to the public'.

COMMENT NOW