We are on the threshold of quantum growth

01 Feb 2010 Editorial Team

LS Vaidyanathan, Executive Director, Nitesh Estates

Bengaluru already knows Nitesh Estates - now itâ€™s time for the rest of India to catch on. The real-estate arm of the Nitesh Group, it is an integrated property development company with a presence across four asset classes. It has developed state-of-the-art homes, hotels, office buildings and retail spaces; in fact, in barely five years of operations, the company has more than 8 million sq ft of premium living and work spaces under development.

LS Vaidyanathan, Executive Director, Nitesh Estates, tells Prachi Bari more about the companyâ€¦.

Why have you selected such diverse locations like Goa, Chennai and Kochi for your plans going forward?
Real estate is a localised business; it tends to be a region-specific operation. It is possible to do the odd large project in other cities, or acquire land through the auction route, but on an ongoing basis, those with local know-how close deals. We concentrate on five large markets and build expertise there - Bengaluru, Chennai, Kochi, Kolkata and Goa are where we will have a significant presence. And in these markets we will have residential, commercial, hospitality and retail projects. We believe it is a question of timing. The launch of Nitesh Estates has paralleled the new wave of wealth creation in Bengaluru and there were a section of people looking to move from premium to super-luxury apartments. In demand was an exclusive environment that also offered the convenience and security of community living. But that does not mean we are not in the volume market. We have projects in the suburbs that offer apartments in the range of Rs 25 lakh to Rs 40 lakh; we will do both the super-luxury and the premium end, which offers volume business.

How do you foresee the Indian real-estate market in terms of the residential and commercial segments?
The residential segment began slowly but by August it has picked up by 30 to 40 per cent and selling prices have gradually increased in the past few months. We are spread across Bengaluru in different segments and approvals are in place where we are receiving very good response for bookings. Earlier, we were selling two and three BHK in the 1,000 plus sq ft range but given the demand for affordable housing we are now offering houses that are between 800 sq ft and 1,000 sq ft and more functional. Today, the Indian market is open for apartments worth Rs 30 lakh to 40 lakh and we understand that whenever an opportunity presents itself, we can create spaces for the larger sector.

You are building the Ritz Carlton; how do you foresee the hospitality business?
Ritz Carlton is a large chain of hotels coming for the first time to India. Its location is perfect - in the CBD - and we expect it to do well. We should be ready with it by 2011. It will be our first hotel and we are talking to other hotels too. We are also planning a Carlton in Chennai that is estimated to cost approximately $ 323 million; the overall development is envisaged to feature 9,300 sq m of luxury retail space in addition to the hotel.

How do you look at FDI? What are its benefits to the Indian real-estate industry?
Nitesh Estates has grown because of FDI. Och-Ziff invested approximately Rs 247 crore for a 25 per cent stake in Nitesh Estates. Citigroup, on the other hand, will invest up to Rs 450 crore in an SPV for hospitality sector projects including the luxury hotel project in downtown Bengaluru. We have different investors for different projects. As a young company with no legacy systems in accounting or corporate practices, it was relatively easy for us to adopt the stringent financial standards that PE (private equity) firms and hedge fund investors demand. We began by raising debt from Indian banks, so it did take a lot of learning for us to move from accounting standards set by Indian banks to that demanded by global investors; as a young start-up, we had to scale our systems very rapidly. These investors have brought in a new level of corporate governance and understanding of risk factors and financial management to the company.

What are the international features that come into your projects? Are there any international architects who assist you?
When we talk of international projects, we talk about bringing in technology and creating luxurious projects that are also energy-compliant. For this, we are working with several well-known architect firms from across the globe. For our first retail project, Nitesh Mall, in Bengaluruâ€™s booming upmarket retail location of Indiranagar, we are associated with Callison, one of the foremost international retail architecture firms based in Seattle, Washington. For our mixed-use development, Nitesh Wimbledon Gardens, in Kochi, we are working with HOK, one of the worldâ€™s largest, most diverse and respected design practices. CPG Corporation Pte Ltd, a leading infrastructure and building development and management services provider in the Asia Pacific region, is designing our super-luxury 36-villa project in Cavellosim, Goa.

Kohn Pedersen Fox Associates, one of the best international design houses, is partnering us in Nitesh City in Chennai. And we are working with Jurong, Singapore, for Nitesh Garden Enclave, Indiaâ€™s largest corporate housing project till date worth Rs 100 crore for ITC Ltd.

Is there any particular area or segment where you find Indian technology and architects lagging behind?
We donâ€™t think India lags behind in knowledge but it is true that we do not employ innovative technology as much as we should in our industry. While we fully endorse that technology should be used to make our products more efficient, we also have to keep in mind that our target markets are very cost-sensitive and using these methods would result in escalation of costs.

However, to state some examples of how we can make our buildings more efficient, there is hi-tech software available and currently being utilised internationally that gives exact information and output about energy and space efficiency. Also, details like placement of beams, pipes and joints can be accurately predicted by merely feeding data, to put it in laymanâ€™s terms. In such a scenario, there is little scope for human error. Abroad, systems are so oriented toward perfection that a lot of effort and research go into pre-execution work, thereby cutting the time of execution, which ultimately results in faster delivery and a high-quality product.

Further, with the current sensitivity to environmental changes happening globally, it is very important to build structures that are self-sustaining and responsive to the local microclimate and economical too. Here, to make another case in point, we use glass indiscriminately on the facades of our buildings, especially commercial ones, little realising that such spaces consume huge amounts of energy to keep the interiors comfortable. If we use glass that repels heat, it would be a lot more eco-friendly.

With the rapid development and urbanisation of India, it is hence advisable to imbibe some of the best practices from abroad rather than reinventing the wheel at our end.

What is your vision?
To achieve perfection in all our endeavours by ensuring excellence, commitment and integrity in order to be a leading national developer with the commitment to create value for our customers and loyalty to our investors. With a humble start in 2004, yet armed with a strong conviction, we have proved that hard work and focus always pays off. In this short span of time, we have made our mark in a highly competitive market with some rapid and spectacular achievements.

Our core focus has always been on consistent growth and delivering quality projects. Our strict adherence to international standards has succeeded in putting us on the threshold of quantum growth - a growth aspired to by many that has paved our way to the future. This is strongly backed by a ceaseless and intense concern for our investors, stakeholdrs and customers. It is this that motivates, guides and pushes us that extra mile to achieve desired results, and build a name to reckon with.

Milestones

In the five years since it was set up in 2001, Nitesh Estates, the unlisted real-estate developer based in Bengaluru, has raised more than Rs 697 crore of capital from global investors. This includes Rs 450 crore for a luxury hotel project funded by Citigroup Property Investors and around Rs 250 crore from the US-based hedge fund Och-Ziff Capital anagement Group, which ranks among the top five hedge funds in the world. Currently, Nitesh Estates has over 4 million sq ft of residential and commercial properties under construction, valued approximately at around Rs 1,200 crore. This includes a Rs 100 crore project to build condominiums for ITC Ltd in north Bengaluru; IT parks in Mysore, Mangalore, Kochi and Kolkata; and premium residential projects and a 250-room luxury hotel in downtown Bengaluru that will be open for business in mid-2009.

LS Vaidyanathan, Executive Director, Nitesh Estates Bengaluru already knows Nitesh Estates - now itâ€™s time for the rest of India to catch on. The real-estate arm of the Nitesh Group, it is an integrated property development company with a presence across four asset classes. It has developed state-of-the-art homes, hotels, office buildings and retail spaces; in fact, in barely five years of operations, the company has more than 8 million sq ft of premium living and work spaces under development. LS Vaidyanathan, Executive Director, Nitesh Estates, tells Prachi Bari more about the companyâ€¦. Why have you selected such diverse locations like Goa, Chennai and Kochi for your plans going forward?Real estate is a localised business; it tends to be a region-specific operation. It is possible to do the odd large project in other cities, or acquire land through the auction route, but on an ongoing basis, those with local know-how close deals. We concentrate on five large markets and build expertise there - Bengaluru, Chennai, Kochi, Kolkata and Goa are where we will have a significant presence. And in these markets we will have residential, commercial, hospitality and retail projects. We believe it is a question of timing. The launch of Nitesh Estates has paralleled the new wave of wealth creation in Bengaluru and there were a section of people looking to move from premium to super-luxury apartments. In demand was an exclusive environment that also offered the convenience and security of community living. But that does not mean we are not in the volume market. We have projects in the suburbs that offer apartments in the range of Rs 25 lakh to Rs 40 lakh; we will do both the super-luxury and the premium end, which offers volume business. How do you foresee the Indian real-estate market in terms of the residential and commercial segments?The residential segment began slowly but by August it has picked up by 30 to 40 per cent and selling prices have gradually increased in the past few months. We are spread across Bengaluru in different segments and approvals are in place where we are receiving very good response for bookings. Earlier, we were selling two and three BHK in the 1,000 plus sq ft range but given the demand for affordable housing we are now offering houses that are between 800 sq ft and 1,000 sq ft and more functional. Today, the Indian market is open for apartments worth Rs 30 lakh to 40 lakh and we understand that whenever an opportunity presents itself, we can create spaces for the larger sector. You are building the Ritz Carlton; how do you foresee the hospitality business?Ritz Carlton is a large chain of hotels coming for the first time to India. Its location is perfect - in the CBD - and we expect it to do well. We should be ready with it by 2011. It will be our first hotel and we are talking to other hotels too. We are also planning a Carlton in Chennai that is estimated to cost approximately $ 323 million; the overall development is envisaged to feature 9,300 sq m of luxury retail space in addition to the hotel. How do you look at FDI? What are its benefits to the Indian real-estate industry?Nitesh Estates has grown because of FDI. Och-Ziff invested approximately Rs 247 crore for a 25 per cent stake in Nitesh Estates. Citigroup, on the other hand, will invest up to Rs 450 crore in an SPV for hospitality sector projects including the luxury hotel project in downtown Bengaluru. We have different investors for different projects. As a young company with no legacy systems in accounting or corporate practices, it was relatively easy for us to adopt the stringent financial standards that PE (private equity) firms and hedge fund investors demand. We began by raising debt from Indian banks, so it did take a lot of learning for us to move from accounting standards set by Indian banks to that demanded by global investors; as a young start-up, we had to scale our systems very rapidly. These investors have brought in a new level of corporate governance and understanding of risk factors and financial management to the company. What are the international features that come into your projects? Are there any international architects who assist you?When we talk of international projects, we talk about bringing in technology and creating luxurious projects that are also energy-compliant. For this, we are working with several well-known architect firms from across the globe. For our first retail project, Nitesh Mall, in Bengaluruâ€™s booming upmarket retail location of Indiranagar, we are associated with Callison, one of the foremost international retail architecture firms based in Seattle, Washington. For our mixed-use development, Nitesh Wimbledon Gardens, in Kochi, we are working with HOK, one of the worldâ€™s largest, most diverse and respected design practices. CPG Corporation Pte Ltd, a leading infrastructure and building development and management services provider in the Asia Pacific region, is designing our super-luxury 36-villa project in Cavellosim, Goa. Kohn Pedersen Fox Associates, one of the best international design houses, is partnering us in Nitesh City in Chennai. And we are working with Jurong, Singapore, for Nitesh Garden Enclave, Indiaâ€™s largest corporate housing project till date worth Rs 100 crore for ITC Ltd. Is there any particular area or segment where you find Indian technology and architects lagging behind?We donâ€™t think India lags behind in knowledge but it is true that we do not employ innovative technology as much as we should in our industry. While we fully endorse that technology should be used to make our products more efficient, we also have to keep in mind that our target markets are very cost-sensitive and using these methods would result in escalation of costs. However, to state some examples of how we can make our buildings more efficient, there is hi-tech software available and currently being utilised internationally that gives exact information and output about energy and space efficiency. Also, details like placement of beams, pipes and joints can be accurately predicted by merely feeding data, to put it in laymanâ€™s terms. In such a scenario, there is little scope for human error. Abroad, systems are so oriented toward perfection that a lot of effort and research go into pre-execution work, thereby cutting the time of execution, which ultimately results in faster delivery and a high-quality product. Further, with the current sensitivity to environmental changes happening globally, it is very important to build structures that are self-sustaining and responsive to the local microclimate and economical too. Here, to make another case in point, we use glass indiscriminately on the facades of our buildings, especially commercial ones, little realising that such spaces consume huge amounts of energy to keep the interiors comfortable. If we use glass that repels heat, it would be a lot more eco-friendly. With the rapid development and urbanisation of India, it is hence advisable to imbibe some of the best practices from abroad rather than reinventing the wheel at our end. What is your vision?To achieve perfection in all our endeavours by ensuring excellence, commitment and integrity in order to be a leading national developer with the commitment to create value for our customers and loyalty to our investors. With a humble start in 2004, yet armed with a strong conviction, we have proved that hard work and focus always pays off. In this short span of time, we have made our mark in a highly competitive market with some rapid and spectacular achievements. Our core focus has always been on consistent growth and delivering quality projects. Our strict adherence to international standards has succeeded in putting us on the threshold of quantum growth - a growth aspired to by many that has paved our way to the future. This is strongly backed by a ceaseless and intense concern for our investors, stakeholdrs and customers. It is this that motivates, guides and pushes us that extra mile to achieve desired results, and build a name to reckon with. Milestones In the five years since it was set up in 2001, Nitesh Estates, the unlisted real-estate developer based in Bengaluru, has raised more than Rs 697 crore of capital from global investors. This includes Rs 450 crore for a luxury hotel project funded by Citigroup Property Investors and around Rs 250 crore from the US-based hedge fund Och-Ziff Capital anagement Group, which ranks among the top five hedge funds in the world. Currently, Nitesh Estates has over 4 million sq ft of residential and commercial properties under construction, valued approximately at around Rs 1,200 crore. This includes a Rs 100 crore project to build condominiums for ITC Ltd in north Bengaluru; IT parks in Mysore, Mangalore, Kochi and Kolkata; and premium residential projects and a 250-room luxury hotel in downtown Bengaluru that will be open for business in mid-2009.