This company is not in a hurry, preferring to ´watch and move´ and focus on timely and quality delivery.
¨We are not in a haste to expand,¨ emphasises Srikanth Badiga, Director, Phoenix India. Having completed 6 million sq ft in the commercial space, 100 per cent of which is occupied, the company has 5.4 million sq ft of commercial space under construction.
Also, 70 per cent of Phoenix India´s high-end residential projects are occupied with another 2 million sq ft under construction. What´s more, in the SEZ space, the company´s project is already operational and it holds the potential to develop another 1.5 million sq ft as it owns the land. Badiga shares more on the company and the market in conversation with AGITH G ANTONY.
What is your assessment of the prevailing investment scenario in Telangana and Andhra Pradesh?
Both global and national economic trends have had an impact on our Tier-I and II cities. Before bifurcation, Andhra Pradesh had been going through tremendous stress, which had an adverse impact on the investment scenario too. The big question was whether the state would ever get bifurcated; if so, would Hyderabad be a union territory, whether the new TRS government would be able to deliver, and so on. Even global investors were watching to see how the government would respond to the challenges. Thankfully, the new Telangana Government is positive. One of the most impressive developments is that the TRS government has been actively involving different industries and debating on all policies - Central and state û involving different groups. So far, the policies they have taken have been convincing and the investment scenario positive.
What drives the growth?
According to the JLL report, Hyderabad needs 60 million sq ft of IT space in the next five years and we are fully competent to provide the entire thing. When investors come in, we need to be ready to provide the solution and we are geared up. The realty sector is fully dependent on the IT sector, which is a major growth driver in Hyderabad. For example, in the IT sector, people focus more on data development and management, especially in Bengaluru, Chennai and Pune; they have the ecosystem available. In Hyderabad, it is yet to start. Currently, the demand-supply scenario is balanced. As a thumb rule, for 1 sq ft of office space you need to develop 1,000 sq ft of residential space. One direct employment generates six indirect employments and you need to create retail and residential space for seven people. So, the scope of the service and support industry is huge.
Tell us about your asset base.
From an initial $333 million, we have crossed over $5,000 million today. As a group, Phoenix is into developing office spaces and high-end residential spaces. We plan well ahead based on our market study. We brought in the concept of completely serviced apartments in the high-end residential space. We are also into power and mining and are foraying into agro. Each project is developed as a special purpose vehicle (SPV).
How do you assess trends in the advanced building materials and construction practices?
Our core strength is property development so we outsource construction. Overall, the gestation period for residential or office space has shrunk considerably and all the top players have been adopting the latest construction technologies. We have the right tools with us: Materials, equipment, technology and a highly experienced team.
Tell us about your funding options. Has the prevailing liquidity crunch affected your business?
We mostly depend on self-funding, not external borrowings, and stick to the agenda of ´built-to-suit´. That is where market intelligence comes into play. We are not controlled by resources; rather they are under our control. So, the liquidity crunch or high cost of borrowing does not impact us. Of course, we have felt the impact of the economic slowdown with an effect on revenue generation. However, we do have lean time preparedness. Moreover, we are not into mass housing or mass office space development.
What do you expect from the forthcoming Union Budget?
Whatever policies are to be announced should enable growth, facilitating a win-win situation for both the government and the business community. It is time the realty sector got specific status. When the industry is down, the government should think of supporting it, perhaps by subsidising power for construction and construction materials.
Going forward, do you have any expansion or project launches planned in the near future?
We want to stick to our core strength: Development of office and high-end residential spaces. By March, we will launch the 1.5 million sq ft Phoenix Lotus Mall in Kukutpally. This multiplex with 11 screens-cum-shopping mall will cost around Rs 750 crore. We are also in the process of developing 2.6 million sq ft of high-end work space for IT and SEZ companies.
What differentiates you from the competition?
One Charminar takes care of the entire Hyderabad; similarly, one Phoenix project is enough to make the difference! We do projects of the right quality at the right time and never undertake hurried expansion.
What is your vision?
Our vision is to be No. 1. We have set a benchmark and all top-end competitors compare themselves to us. For any industry, the growth graph is not always going to be stable. We have placed ourselves in a balanced manner. We are not just expanding because we are doing well. We are going slowly and, at the same time, prepared for the quantum jump. We have land banks where we can develop further.
Year of Establishment: 2012
Top Management: Suresh Chukkapalli, Chairman; Gopi Krishna Patibanda, Managing Director
No of Employees: 475
Centre of Operation: Hyderabad
Current Order Book: 20 million sq ft
Asset base: $5,000 million
Ongoing projects: Avance Business Hub, IT SEZ; Golf Edge, residential and office space; mixed-use development project in Hafeezpet; commercial building in Kondapur; high-end residential project in Nanakramguda; residential township in Chennai
Upcoming projects: Multiplex in Hyderabad; residential project in Jubilee Hills; retail mall in Balanager; and a couple of other major projects
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