Expressing confidence of a strong 25 per cent growth for fiscal 2019-20 for the company, the Bengaluru-headquartered real estate major Brigade Group chief M R Jaishankar stated that the current slowdown for real estate sector is more of a cyclical phenomenon observed at every 10-year cycle and that a revival is expected soon.
M R Jaishankar, Chairman and Managing Director, Brigade Enterprises Ltd, maintained that the current overall economic slowdown in the country was a cyclical slowdown. "The government is acting on it but the responses may have to be faster than what it is now. We believe the real estate cycle is more-or-less a ten-year cycle," he said on the sidelines of the launch of company's new hotel at Gujarat International Finance Tec-City (GIFT City) on Wednesday.
"We have seen a similar slowdown in the past in 1989-90, later in 1998-2001, 2008-2011 and the latest one, which started in 2019. But for real estate sector it had started earlier than 2019, since demonetisation and GST," Jaishankar stated.
While he underlined the present challenging business scenario, he also hoped for a suitable government intervention in the upcoming Union Budget on February 1. "We just hope some benefits - wherever the government is positioned to extend - they will hopefully do it."
Giving an outline of company's future plans, Jaishankar stated that Brigade Group has in total about 44 million square feet of area on drawing board, of which about 19 million sqft is already under construction. This includes 10 million sqft of residential, 8 million for office and the rest for retail and hospitality.
For hospitality portfolio, Brigade plans to add more room capacities to its existing 1350 room keys and take it to 2,000 in the next 24-30 months. "We plan to invest anywhere between Rs 2500-3000 crore per annum across businesses. The investments will be funded through a mix of internal accruals, institutional finance and leased rentals. The debt-to-equity ratio of the group is 1:1. We have only 20-22 per cent exposure in residential space. We are currently comfortable with our debt levels," Jaishankar stated.
For the GIFT City property, Brigade has tied up with Accor Group under the brand 'Grand Mercure', which has 151-room capacity - set up with an investment of Rs 150 crore in the domestic area of the GIFT City, which also houses the SEZ - International Financial Services Centre (IFSC).
Initially, the hotel is expected to see occupancy at around 35-40 per cent, which may go up as the businesses across GIFT City pick up the pace. The Group, however, has an overall occupancy ratio of 70-75 per cent across its properties, which according to Jaishankar is a marginal growth over last year.