Jan 15 2016 | Q&A

Dhaval Ajmera, Director, Ajmera Group

Buildings, infrastructure and the environment are inseparably linked. Materials, energy, water and land are all consumed in the construction of buildings and infrastructure. These consecutively become part of our living environment, affecting our living conditions. It is therefore vital to explore environmentally and economically sound design and development techniques in order to design buildings and infrastructure that are sustainable, healthy and affordable, and encourage innovation in buildings and infrastructure systems and designs.

Dhaval Ajmera, Director, Ajmera Group shares views with Sandeep Sharma about his company’s footprint in the real estate sector, performance in the current year, emerging trends, market scenario shaping up in Mumbai Metropolitan region, challenges faced, funding issues, single window clearance system and what needs to be done to boost real estate sector growth. Edited Excerpts...

Could you brief us about your company's footprint in the real estate sector?
Ajmera Group is recognized as one of India's leading Real Estate Company after having itself established over the last 50 years. The reach and interest of the Ajmera Group has only grown with time and has extended to other realms, such as solar power, sports, vaults security, cement and social welfare. The company has a strong presence in and around Mumbai, Pune, Ahmedabad, Surat, Rajkot and Bangalore as well as an international project in Bahrain.

How did your company fare so far in FY2015-16 in terms of business generated, growth rate and your projects completed/announced?
Ajmera Realty has witnessed decent sales in the current financial year of 2015. Although we had set high expectations, we have seen good traction in the sales of our projects in spite of the fluctuations in the market. We have successfully launched a couple of projects with an approximate total area of about 25 lakh sq ft, which include-

  • Ajmera Stone Park in Bangalore
  • Ajmera Villows - Phase 2 in Bangalore
  • Ajmera New era in Kalyan 
  • Ajmera pristine in Borivali
  • Ajmera i-land -  Treon in Wadala
  • Ajmera Heritage City in Khardi-MMR
  • Ajmera Exotica in Pune
  • Casa Vyoma in Ahmedabad

Ajmera Realty has also successfully completed the following projects of approximate 15 lakh sq ft in the year 2015

  • Yogi dham in Kalyan
  • Ajmera Regalia in Borivali
  • Ajmera Avenue in Bangalore
  • Ajmera Stone Park – Phase 1 in Bangalore
  • Ajmera Aria in Pune
  • Ajmera Enigma in Ahmedabad  

Could you provide us insight about the emerging trends in the Indian real estate sector? According to you, which segment of the real estate will be the top runner in the next five years? And why?

  • A key trend that has emerged in the last couple of months was on the affordable housing sector erupting in the market where a major developer industry ventured into the same. This trend was witnessed in a number of parts of the city, especially the outskirts along with the other parts of the country. The boost that happened in terms of affordable housing has created a new wave for developers and has been a key highlight for 2015 and will continue to be soon in 2016.

  • Construction technologies are going to be another major trend in the coming year, with the right kind of pricing and amenities.

  • Every project should be mini city or a smart city within itself. The opportunities and amenities should suffice enough for the person’s daily requirements; this trend too will be major one in the coming year

  • Brand value of the developer too plays a vital role in any future projects to come

These are the four emerging trends according to me that will rule in the coming year in the real estate sector. How is the market scenario shaping up in Mumbai Metropolitan region? What kind of challenges are you facing in improving your project sales?
The market scenario in the MMR has been in a very volatile stage currently. The fluctuation varies from good to bad. In the future, we expect it to improve, as changes are happening in the policies by the government. So the expectation is to have higher positive levels and some negative changes in the coming year. The permissions related issue are the biggest challenge today in the real estate market, the interest rates and the premiums too pose as a hurdle in the projects to become viable and affordable. Primarily- the permissions, premium, clearances of government policies are the 3 major challenges what are faced in project sales.

Are you also looking at opportunities in redevelopment space in MMR?
 Yes, we are definitely looking at opportunities in redevelopment space in MMR, but we are also looking at projects at consolidation stage. We are open to good opportunities coming our way.

What's your take on the need to streamline Construction/Project Finance in India? How do you meet your funding requirements?
Today, funding is witnessing a huge upsurge in India and we see a huge opportunity coming in from the same. But at the same time the restrictions too need to be opened by the RBI in terms of funding on the land. The government should also make certain pprolicies in the banking sector which will help the developer to take funding on the land. When the government opens up funding for land, it definitely will result in huge opportunities in the banking sector as well as the real estate sector.

What’s your take on sustainable construction and green building development? What's your contribution towards green building development? Please add the point as discussed.
Buildings, infrastructure and the environment are inseparably linked. Materials, energy, water and land are all consumed in the construction of buildings and infrastructure. These consecutively become part of our living environment, affecting our living conditions. It is therefore vital to explore environmentally and economically sound design and development techniques in order to design buildings and infrastructure that are sustainable, healthy and affordable, and encourage innovation in buildings and infrastructure systems and designs.

As Ajmera’s contribution for green building development, we use recycled material for the construction of the projects, Fly ash bricks along with developing OWC: Organic Waste Converter, STP: Savage Treatment Plant and Solar Heater in all the projects.

Could you comment on the need and importance of Single Window clearance system for real estate projects?
In a city like Mumbai, a real estate project needs a list of permissions with an average of 100 permissions at every level. These permissions range from location clearance to safety measures of a project. The time frame that a project goes through from its commencement till its completion to clear these permissions is 12-18 months. 

Moving in sync with today’s times and keeping up pace with real estate market growth, the government should look at "single window clearance". Considering the increasing furore about delayed housing projects, the need for single-window clearances for residential real estate projects has now become an imperative that the government must act on. This will ensure that developers bring down the cost with faster approvals, as well as assured and timely delivery of the projects. This move will significantly reduce the time lines of project announcements which in turn will have a huge saving in interest cost and other factors. 

What's your take on the Cement prices across the country? To what extent it affects the pricing of your projects.
The cement prices have reduced by 33% over the last fiscal year (January to December). We have witnessed that all over India the price of cement has reduced considerably because the demand for cement has stepped down. With the overall economic scenario, the real estate industry is affected as well. The cement industry should keep the prices at a reasonable level. Today, the market has become expensive with the premiums increasing with each passing day where the steel prices going up which in the long run is heaped on the customer. This in turn causes the sales to go down which is a negative thing for the real estate sector. This is a cyclic effect and to curb this effect, the input suppliers should rationalize the prices to maintain the balance.

What kind of solution do you recommend to overcome shortage of manpower in the construction sector?
The government had initially started off with the scheme of minimum labour, pension funds, distributing money to labourers. The authorities should encourage people to move towards places where the real estate sector is growing, and restricting from just providing minimum pension. These will encourage them to work in the construction sector, and there will be a huge manpower push to the real estate sector.

What kinds of measures are required to be initiated by the government to boost real estate sector in India?

  • Interest rates: Real estate in today’s times has been charged a huge premium in terms of interest rates, which is being viewed as "High risk" by the banking industry. With the vision of providing respite to the developers, the government today should chart out special rates for housing projects which are developed with the focus on affordable housing. This move will drastically bring down the finance cost of both the developer and the buyer, which consecutively will prove to be a boost for the demand for housing. The authorities need to provide special focus and attention on this sector which acts as a booster to the real estate industry. 

  • Taxes and premiums: In a metro city like Mumbai, where there is scarcity of land, the various taxes levied by the government and the premiums are making housing more expensive with each passing day.  According to a study, if we were to compare premium cost against construction cost in areas like certain suburbs or Mumbai as a whole, these costs are almost equal.  This proves the fact that, it is 100% of construction cost.

  • Permissions: In a city like Mumbai, a real estate project needs a list of permissions with an average of 100 permissions at every level. These permissions range from location clearance to safety measures of a project. The time frame that a project goes through from its commencement till its completion to clear these permissions on an average would take 12-18 months.  Moving in sync with today’s times and keeping up pace with real estate market growth, the government should look at "single window clearance". Considering the increasing furore about delayed housing projects, the need for single-window clearances for residential real estate projects has now become an imperative that the government must act on. This will ensure that developers bring down the cost with faster approvals, as well as assured and timely delivery of the projects. This move will significantly reduce the time lines of project announcements which in turn will have a huge saving in interest cost and other factors.

  • Income Tax benefits: Over the last few years the real estate sector has witnessed an upsurge on government premiums which makes housing further expensive.  If the government looks into this carefully and reduces these premiums this will be a huge turnaround for the real estate scenario.  In order to boost the housing sector the government should have an holistic view including both the developer and buyer by reflecting upon the income tax benefits for them.

  • Industry status to be given to the real estate sector


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