All realty segments doing well: Irfan Razack

Irfan Razack, CMD, Prestige Group, says “one sector which one is aiming at in Mumbai is the mid-income group housing, say between Rs 75 lakh to Rs 2-2.5 crore. That is where the actual sales will keep happening and you will get volumes. Now, the moment you go to Rs 5-10 crore, you will get the numbers, but it is slightly slow and then you have the niche market where it is upwards of Rs 20-25 crore. That is the luxury market, a separate market targeted toward the different clientele.”

My first impression of Prestige is it is a Bangalore-based real estate company. You have come to Mumbai and you are moving to NCR. Let us talk about the latter part. How has the experience been in Mumbai and what are the demand vectors looking like in the NCR region?

Irfan Razack: In Mumbai, we have been doing pretty well. We have just got four projects in Mumbai now, the residential ones, apart from two large offices. I think we are faring pretty well there and we are quite happy with the type of response we got for our sales. We are looking to launch a couple of more projects very soon and I believe those will give us some positive numbers.


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The dipstick indicators are suggesting that the real estate demand is strong, but the pricing now seems to be plateauing. Can I say that also applies for Prestige because that is the sense I have got, let us say, from a Lodha or from a DLF or Max.

Irfan Razack: The price has to plateau. To stay relevant, we have to make sure that the price does not just spiral off because then you breach the affordability barrier. According to me, even now, the pricing has gone up. Now, okay, it is not a function of that we are trying to make more profits. It is just that the construction costs, the land costs and overheads have gone up and we do need to make a fair margin and you have seen our numbers, always we land up with the single digit PAT margins, but we are trying hard to see that we are efficient to stay relevant and to make sure that the price does not spiral up and offer a good product to the customer.

What are your thoughts on the way absorption is happening in these key markets like Mumbai because when we look around in the ecosystem, there are massive launches lined up by almost every luxury real estate player. How is the inventory versus absorption around there?

Irfan Razack: That is an absolutely relevant question. We have to look at absorption in different parts. One is the sector which is aiming at the mid-income group housing, say between Rs 75 lakh to Rs 2-2.5 crore. That is where the actual sales will keep happening and you will get volumes. Now, the moment you go to five and ten, you will get the numbers, but it is slightly slow and then you have the niche market where it is upwards of Rs 20-25 crore. That is the luxury market, a separate market targeted toward the different clientele.

So, you get those numbers, but you do not get volumes there. That is how I look at the different buckets, the different target audiences. If I do a launch in central Mumbai, I cannot offer anything at Rs 2-2.5 crore and at the same time, I cannot go into the outskirts and do a project which is very high priced. So, it is a balance that happens and that is relevant to every city that we operate in. I think that is the key to see that we have the right product, right mix in the right location to make sure that the volumes keep going up. I can tell you that the demand is definitely there and the good news is demand is there from every residential segment. People who can afford to buy larger, more expensive homes are buying that and of course, the volumes are coming from the target price. All-round, it is a good time for us where the business is happening and happening pretty fast.

But assuming that in the Mumbai market you would be in the over Rs 5 crore range, you would be looking at the mid-premium segment?

Irfan Razack: We are working in Mulund. In Mulund, I have got volumes there. We have got a large project, which is the Prestige City, Mulund and that is the first segment that we launched is almost 2,000 flats and out of that, we have sold say upwards of 1,600 in the last two years which has done very well.

Similarly, there is another segment called Prestige Forest Hills and Prestige City which is to be launched, where the approvals are getting ready and even that will bring in another 1,600 flats. With that, the project gets more or less completed in terms of sales and then the only job will be to keep building. We have to look at areas like Thane and some other outskirts so that we get the numbers and the pricing right. Of course, when you come into central Mumbai, it is upwards of Rs 5 crore and that is the mid-segment. It is slightly more premium and there are buyers for it, but then that is a different segment of people that will go for this.

Let us look at the three main verticals for any developer — residential, commercial, and to a large extent, I would say retail. I am making three compulsive classifications, malls largely. Which out of the three verticals I mentioned you are excited about?

Irfan Razack: We should add hospitality because we are in hospitality in a large way. So, every product is quite exciting. You see now what happens is if you take retail malls, it is not that you can produce a retail mall in every area that you do or you can produce a retail mall every year, but residential, you can keep doing and churn capital.

In office and in retail, on the other hand, you have to look at where the catchment is and the design parameters are very different. But it gives a different satisfaction once you complete a say a million square feet mall. Today, we have got the Forum South in Bengaluru or the Forum Kochi which we opened in this financial year and both are doing pretty well and the footfalls are fantastic.

But then there is a cost, there is a capex and there is a holding cost. You cannot sell this asset unless you sell it as a completed asset if you do want to, which we did some time ago to Blackstone. But we definitely want to build. There is a big pipeline of malls that we are building and we will reach about 12 malls in the next three years and that is the game plan.

But if you take office, again we have different segments, whether it is CBD, non-CBD, or it is on the peripherals as demand has come back for offices and people are taking up space. Companies are committing to larger spaces also. But I would say the office is the least exciting. You just need to build it, then you look for a good occupier. My team tells me we are going to now change the way offices are built and hotelize the offices and make them more exciting and that is what we are trying to do. That is where the occupier is also very happy, the way we run the office business and then of course, today people are traveling and hospitality is booming as well. All in all, every segment of real estate that we are present in is doing pretty well.

The one segment that we need to focus on and probably build more is warehousing. We have just done one warehouse and I believe there is more potential there.

William Murphy

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