‘Redevelopment is a big opportunity’
Mumbai-based real estate company Orbit Corporation focuses on redevelopment of existing properties in Mumbai.
By Rajesh Unnikrishnan, TNN |
Mumbai-based real estate company Orbit Corporation focuses on redevelopment of existing properties in Mumbai. It acquires land or dilapidated buildings and converts them into premium commercial or residential properties. Pujit Aggarwal, CEO and MD, Orbit Corporation, spoke on emerging real estate scenario.
| Pujit Aggarwal, CEO and MD, Orbit Corporation |
Is dealing with dilapidated buildings a lengthy process?
We specialise in converting dilapidated buildings into premium high-end apartments. It involves identification of such structures, many rounds of negotiations with the landlord and tenants on various aspects, dealing with several statutory authorities at various stages of the project, the process of rehabilitation of tenants etc.
The Maharashtra government is now aggressively pursuing the redevelopment of such buildings. A large number of developers are now keenly participating in the redevelopment projects as they present very high returns. However, we have been able to build a strong portfolio of such projects in a short span of time and are set to take advantage of the opportunities this segment presents
How big is the niche property market in Mumbai?
Among all metros, Mumbai is still one of the most lucrative markets. The property market in south and south-central Mumbai has shown a growth of 20% on average in the last two years and is expected to continue with the same growth.
The major constituents in this growth are IT/ITES services due to increasing outsourcing by multinationals, and there is increasing amount of urbanisation and immigration to Mumbai due to better job opportunities. In fact, as our business strategy we have primarily focused on redevelopment projects in the island city. The opportunity is so huge that as many 19,642 dilapidated buildings are waiting for redevelopments, according to MHADA data.
This is a very bold step. Vacant land in urban areas will now be available for development. This will generate lot of housing stock in the urban areas and the buyers will have better choices. The landlords who were scared of developing their lands because of the fear of losing a part of their land to the government can now develop them. Though the supply of land will improve, the prices will remain lateral, at least in Mumbai, because of the huge gap between demand and supply.
This will also speed up the process of making Mumbai a world class city as JNNRUM funds will flow faster and big ticket infrastructure projects will be completed on schedule
How many projects does Orbit have on hand and what additions are expected?
If you were to break-up between commercial projects and residential projects, what would it be like?
How do you property rates moving in the near future?
Mumbai certainly will see more supply. We are expecting the supply to hit in a substantial way by the end of the year. So given the situation, we may find that prices are either plateaued out or we could even see a correction of sorts.
But since Mumbai has a phenomenal demand, it seems unlikely that there would be any major correction of sorts. We follow a process of disciplined selling; we have a high degree of pre-sale of a project at an early stage. This enables self-financing, which makes us less vulnerable to interest rate changes.
We specialise in converting dilapidated buildings into premium high-end apartments. It involves identification of such structures, many rounds of negotiations with the landlord and tenants on various aspects, dealing with several statutory authorities at various stages of the project, the process of rehabilitation of tenants etc.
The Maharashtra government is now aggressively pursuing the redevelopment of such buildings. A large number of developers are now keenly participating in the redevelopment projects as they present very high returns. However, we have been able to build a strong portfolio of such projects in a short span of time and are set to take advantage of the opportunities this segment presents
How big is the niche property market in Mumbai?
Among all metros, Mumbai is still one of the most lucrative markets. The property market in south and south-central Mumbai has shown a growth of 20% on average in the last two years and is expected to continue with the same growth.
The major constituents in this growth are IT/ITES services due to increasing outsourcing by multinationals, and there is increasing amount of urbanisation and immigration to Mumbai due to better job opportunities. In fact, as our business strategy we have primarily focused on redevelopment projects in the island city. The opportunity is so huge that as many 19,642 dilapidated buildings are waiting for redevelopments, according to MHADA data.
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Mahararahtra has finally repealed the Urban Land Ceiling Regulation Act...This is a very bold step. Vacant land in urban areas will now be available for development. This will generate lot of housing stock in the urban areas and the buyers will have better choices. The landlords who were scared of developing their lands because of the fear of losing a part of their land to the government can now develop them. Though the supply of land will improve, the prices will remain lateral, at least in Mumbai, because of the huge gap between demand and supply.
This will also speed up the process of making Mumbai a world class city as JNNRUM funds will flow faster and big ticket infrastructure projects will be completed on schedule
How many projects does Orbit have on hand and what additions are expected?
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We currently have 1.1 million sq ft spread across 16 projects. Thirteen are redevelopment projects and three commercial projects. We have identified 18-20 projects, on which we are in various stages of negotiations, with a saleable area of 2.1 million sq ft and expect to add these properties to our list of projects over the next 6-9 months. We are also planning to develop concept-based townships and are in the process of identifying adequate land. We intend to take up a 200 acres project in Raigad district, near Mumbai. If you were to break-up between commercial projects and residential projects, what would it be like?
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The break-up typically is in the same model that we have followed so far ��� 60% premium residential and 40% premium commercial on a project level basis ��� that is what we would be doing. Of course, we also have the other two segments, which is the redevelopment sector ��� that is the old buildings that we acquire. So, that is another 70% of the area at the project level where we will be acquiring projects for redevelopment and 30% of the projects would be open plot development like the Gujarat Ambuja plot.How do you property rates moving in the near future?
Mumbai certainly will see more supply. We are expecting the supply to hit in a substantial way by the end of the year. So given the situation, we may find that prices are either plateaued out or we could even see a correction of sorts.
But since Mumbai has a phenomenal demand, it seems unlikely that there would be any major correction of sorts. We follow a process of disciplined selling; we have a high degree of pre-sale of a project at an early stage. This enables self-financing, which makes us less vulnerable to interest rate changes.
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