"Pune now has become the trendiest city, it is a city of rich culture and heritage, the style of living has changed a lot. Real estate in Pune has a very high demand from many localities as well as from NRIs, it is the most hot selling sector in Pune. Real estate in Pune has seen colossal changes in past few years. Baner, Balewadi, Aundh, Hadapsar, NIBM road, Kalyani Nagar, Hinjewadi, etc. are few areas which have developed to match the international standards."
Vinay Phadnis, CMD, Phadnis Properties Ltd shares his views with Sandeep Sharma about his group, core competencies, real estate projects, Pune realty scenario, housing stock issue, increase in construction cost, expansion plans and recommendations for solving housing shortage in India. Edited Excerpts...
Tell us about your group and core competencies in the real estate sector?
Our Phadnis Group is a leading business group active in various segments from real estate to hospitality since last 9 years. Our group is spread across various sectors through the companies like Phadnis Infrastructure Ltd. (PIL), Phadnis Properties, and Phadnis Hospitality etc. PIL has bagged projects worth Rs 1000 Cr contracts which include residential colonies, commercial buildings, hospitals, and telecom towers in Maharashtra, Karnataka, Andhra Pradesh, Gujarat, Madhya Pradesh and other States. PIL is prepared to undertake big ticket national projects like constructions of highways, bridges, dams and theme parks. We have a noteworthy stake in hospitality segment and have various initiatives to our credit.
Phadnis Properties deals in real estate and has an outstanding track record with number of prestigious projects completed as well as in ongoing stage. Considering huge gap between demand and supply, in next few years we are eyeing to complete construction of approximate 33,00,000 sq.ft. It covers big residential and township projects across India including Mumbai, Pune, Bangalore, Noida etc. Each of our project has some specialty in terms of architecture, exceptional construction quality, state of the art & ultra-modern amenities, eco-friendly compliances and most importantly we deliver happiness along with the homes to our customers.
Can you provide us an insight about your upcoming and recently completed real estate projects?
Our real estate portfolio includes excellent projects like ‘SahilSarvada’, ‘Sahil Saga’, ‘Sahil Sujal’, ‘Sahil Sereen’ to name a few. The current projects such as Takshasheela (at Narhe) and Green Square (at Baner) have received a great response owing to their exceptional designs and excellent quality of Construction. Grihapravesh, a residential project is considered as one of the best residential projects at Noida. The overwhelming response to our new scheme Eastern Ranges, at Keshavnagar, Mundhwa underlines the reliability and trust established by Phadnis Group. This new ultra-modern mini-township is being viewed as the residence of an upwardly mobile young Pune of tomorrow. This 18 acre township has been planned to make the most of the natural light and fresh air. The specialty of our housing projects lies in our design and construction style, which caters to the needs of generation Y.
How is the real estate scenario shaping up in Pune? Do you see an upward trend in CY2013?
Pune now has become the trendiest city, it is a city of rich culture and heritage, the style of living has changed a lot. Real estate in Pune has a very high demand from many localities as well as from NRIs, it is the most hot selling sector in Pune. Real estate in Pune has seen colossal changes in past few years. Baner, Balewadi, Aundh, Hadapsar, NIBM road, Kalyani Nagar, Hinjewadi, etc. are few areas which have developed to match the international standards. Demand for residential, commercial and retail real estate has intensified in Pune as well as throughout India.It has become obvious that property in Pune has become a hot selling sector.
Pune is supposed to be one of the best Indian cities to live. It has significant contribution in the growth of Indian IT, BT, Automobile segments. The education here is supposed to be the best in India. Its proximity and connectivity with Mumbai city, the financial capital of India also adds much value for business community. The youths easily find their suitable career options in this cultural capital of Maharashtra. In recent time, we have witnessed tremendous growth in real estate segment in Pune. Crossing the limits of suburbs, the people are eying new sites that suit their needs and fulfill their expectations.
Pune has huge growth potential in the near future. According to a report presented by McKinsey Global Institute, in next two decades Pune will be sixth biggest city in India, after Mumbai, Delhi, Kolkata, Chennai, Bangalore. It will have a population of more than 10 million. It is obvious that the demand would be always there and will have to be catered to as per the needs of the growing population. If we compare this scenario with other metro cities like Hyderabad or Ahmedabad, the real estate segment sees more opportunities and growth potential in Pune. While saying so, it is necessary to mention that Pune has to overcome various hurdles to become the best city. It is now a the right time to implement effective public transportation systems such as Metro rail or Monorail. There must be a quick decision-making procedure so as to keep up with the development planned. The new development plan for Pune has not even been approved since long. The sewage treatment, waste management, water supply will remain key issues to be addressed with effective mechanism. The environment friendly projects, practices and experiments should have got encouragement to keep the city pollution free. We should not forget that Pune has been a preferred location due to its pleasant weather conditions, environment and reputed establishments in education & industries. It is our duty to keep this reputation intact.
The real estate segment that witnessed a bit slowdown in 2012 would definitely experience the revival after March With strong signals of strengthening global as well as domes- tic economy, we can now expect major change in the market. Although the mid-segment has changed its priorities to some extent the budget homes and ultra luxury housing are still seeing better prospects. Now the challenge is how we will be able to meet the expectations of genuine buyers in wake of high inflation that has been stopping him to take decision so far.
Apart from Pune, which other geographies are you targeting for your real estate projects?
Apart from Pune now, we have planned various projects that would cover approximately 60 lacs sq. ft. to develop nearly 5500 to 6000 residential flats in near future across new suburbs in Pune, Mumbai and Noida. In association with Grihapravesh- Buildteck Pvt Ltd we are developing Griha Pravesh at Noida, Delhi. It is a complex of 7 building which consists of 2, 3 & 4 BHK luxurious apartments, penthouses as well as bungalows. The apartments are 18 storied with premium specifications & amenities. In Mumbai, Phadnis Properties has undertaken a redevelopment project-Om Kailas Ganga, at premium location of Mulund. Thus, now at this date, Phadnis Group has successfully spread its wings across all major cities in India.
There are lots of talks and reports about the building up of large housing stock in Tier 1 cities. Is it true that builders are holding up housing stock and not willing to reduce price?
As far as I know, the scenario should be interpreted in other way. Like the common buyer, the inflation has equally affected the prospects of the builders too. The availability of funds also remains the key problem for the builder to complete the project in time and in term of matching the budget set for the same. So, it is not so easy to keep stock and not selling just to get mileage of the situation. In fact, it depends on the surviving capacity of any construction company. Still, I don’t think that this is the picture in general; rather it may be a perception. Selling the product at reduced or minimum profit can be understood but expecting one to sell the product at below the investment made, seems next to impossible in any segment. So, I think this a matter of perception and not a policy in general that is being adopted by all.
How far the construction cost has increased in your projects over the last three years in percentage terms? Out of cement, steel, equipment and human resources, which of the component was largely responsible for the increase in construction cost?
It is true that construction cost has increased a lot in last few years. Right from cement to steel there is almost 25 to 40% increase in the cost. Not only have the cost of material but the taxation and legal costs have also in- creased. The skilled as well as unskilled labour also got dearer due to significant increase in inflation rate. The cost of land also got increased everywhere in last few years. All these factors have affected the projected budget of builders as well as buyers. In many cases, if there is a project being affected due to unavailability of labour or resources, the alternative solution is getting machines on site. But it is still a very costly affair in India that proved to be of little help in avoiding delay in implementation of project so as to save the time and cost.
Going forward, what are your immediate and long-term plans for expansion in the realty sphere?
We have already started spreading our wings across India. After Pune, Mumbai, Bangalore, Noida we are planning to expand our base little more and in tier 2 cities across India. We are also in talks with foreign majors to have joint ventures abroad.
What is your recommendation for solving the growing housing shortage in urban areas?
The best solution I can recommend in current scenario is the budget homes that meet the budget of middle class people. The middle class has been seen as the most prospective home buyer. In last few years due to inflation as well as economic instability, this genuine buyer found it difficult to purchase a house as the cost of it has already gone beyond his limit. So the conditions are very strange. Yes, there is a demand but still the genuine buyers cannot afford the price tag. So, it is high time to work on budget homes that can fulfill the dreams of home for genuine buyers.