Our strategy is to plan, build and execute fast: Vikas Oberoi

If there is one thing that Vikas Oberoi would like to do more often, it is flying an aircraft. The 48-year-old Chairman & Managing Director of real estate behemoth Oberoi Realty has been able to keep his business flying with record revenues in 2016 at a time when the sector has been in a slump. Oberoi, whose projects command a premium such that customers are reported to queue up ahead of a new launch, modestly says that the company is always looking to constantly raise the bar. In an interview with BusinessLine, Oberoi speaks on a range of issues, including the impact of demonetisation and the worry over the new real estate regulator RERA.

Post-demonetisation, there seems to be a belief that the sector is going through a slump.

In our view, demonetisation is already a non-issue. There is nobody who buys with cash in real estate sector. When law is stricter, movement of cash also becomes stricter and the result is good. People realised it was good to go digital and in many ways, it proved beneficial.

At a macro-level, the narrative we are picking up is that the consumers are holding back and at retail level there is not much spending. Do you also see that happening?

Retail per se is not bad. Some players have not been playing the game well. Retail is doing fabulously well. Most of the time, the problem is not in the product and not in the market conditions. There is super interest in India; GST is in place. We are an internal consumption story. So, we don’t see any headwind.

What is your strategy regarding land. Most developers seem to build a land bank?

Land is the raw material for our main product and our belief is that raw material is available at any given point in time. In the current market situation, land prices are not going up. So, why should we invest. It is an idle-asset where you tend to lose money. We don’t have a word called land bank. We want to be like a car company and follow the just-in-time model for our development. We are in a generation which wants instant gratification. Our strategy is to plan, build and execute fast.

What is the total area under development?

We have about 7.04 million sq ft of completed projects with estimated 21.55 million sq ft of ongoing and planned projects in residential, commercial, retail, hospitality and social infrastructure in multiple micro markets of Mumbai.

You had recently floated a separate mall business. Is it a precursor to REIT?

We are running a successful mall business (Oberoi mall in Mumbai). At the back of it, we are building and developing four malls. The idea was to create a vertical which will look into the mall business. A lot of people wanted to partner us. In two to three years time, we may do our REIT.

REIT today has not picked up even though it was introduced almost three years back. How do you see it?

There are some inefficiencies in taxation, in transfer pricing in spite of SEBI undertaking changes. REIT is a fantastic thing as legitimate money will come into the business. REIT is successful internationally.

Are your malls strata sold or leased out?

Our entire mall is leased as it gives us better control. Strata sales is like killing the malls business. Leasing it gives us better control. We have two new malls coming up in Worli and Borivali.

What is your stance on GST?

It is a proactive step and the government is also looking to ensure that there is proper implementation. It will a major step even though it is tax-neutral for the real estate sector. At the end of the day, if things are systematic, then it will be easy for all. GST for everyone is either tax-neutral or tax beneficial. But where the government is benefiting is in its stricter implementation.

You have been talking about stepping out of Mumbai. Will it happen in the near term?

We are evaluating. But, wherever we go, we will be doing joint development as we believe that real estate is a local business.

What about RERA? There are concerns regarding RERA and its implementation by May 1.

RERA is a paradigm shift in the real estate sector but we will have to see how implementation goes about in RERA. All of us are worried over possible over-regulations.

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