'We will develop 7,000 affordable homes and 7-8 million sq ft of commercial projects,' says P Ravindra Pai, MD, Century Real Estate

With over 3,000 acre in its land bank and a development portfolio of over 20 million sq ft, Century Real Estate is among the largest owners of real estate in Bengaluru. And now, the company has mega plans to venture into the affordable housing segment along with developing 7-8 million sq ft of commercial projects. P Ravindra Pai, Managing Director, Century Real Estate, elaborates upon the new foray, big investments and more in conversation with SERAPHINA D'SOUZA. Tell us about your venture into the affordable housing segment and the investment. Century has a strong experience in developing mid-income homes, having delivered more than 2,500 units. Lauding the vision of 'Housing for All', we intend to invest Rs 1,100 crore to develop 7,000 homes in the affordable segment in the next five years. We already own lands for these projects, which are at an advanced stage of approvals and are looking at launching the first project shortly. What about your plans to develop 7 million sq ft of commercial projects in Bengaluru over six years? The commercial portfolio has been developed considering the expected shift of the City Central Business District to Hebbal and the advantage Century has on account of holding multiple land parcels on the Airport Expressway in the city. We intend to develop 7-8 million sq ft in these locations, where the leasing risk is low and can create a steady annuity base. We want to create a Rs 2,000-crore office platform, where an investor brings in the initial Rs 1,000 crore and we bring in the required land and development expertise. We are currently in talks with investors regarding the same. The first project, consisting of ~1 million sq ft, is at an advanced stage of approval and work is expected to start in March this year. Tell us about your procurement plans for upcoming or ongoing projects. In terms of procurement, the company works on turnkey contracts for development of projects. The same is accordingly factored while engaging with contractors for each project. We have best practices in place: The team works on a process-driven flow chart, which consists of prequalification, pre-bid meetings, bidding and techno-commercial discussion, which leads to the award of the contract. For upcoming projects, we require large cap contractors as well as suppliers who adopt fair business practices. Elaborate on advanced construction technologies that the company implements in its projects. Precast technology is gradually being adopted by several developers, builders and contractors in India because of the obvious advantages in terms of speed, quality, labour efficiency and cost of construction. This helps in saving up to 64 per cent of the time taken for similar projects using normal construction methods and technology. The use of this technology can bring down construction cost by 10-15 per cent, and it could be deployed to bridge the demand-supply gap in the real-estate sector. Especially in the commercial and affordable housing segments, this technology is proving beneficial as builders are trying to capture demand early by speeding up construction using prefabrication technology, which allows the finishing of a building in 12-15 months as opposed to around 20-24 months using traditional methods. Besides this technology, we also use GGBS in concrete and soil-stabilising chemicals for our buildings. How do you raise funds and ensure the desired RoI in your projects? Project funds are raised based on the project requirement; accordingly, we raise a mix of equity, debt and construction finance. The project RoI is taken care of by ensuring lower blended cost from a mix of debt and construction finance, and following a robust business plan and phasing strategy, which ensures the desired return. What are your plans for the 3,000-acre land bank in Bengaluru? Along with the four affordable housing projects and office projects that we plan to develop, we are also planning to launch about 1,350 plots this year in two projects. At present, the company has a mix of residential and plotted development projects in and around Bengaluru. Plotted development will continue to be another area of focus for us. How has the year been for the company and what are your target revenues for the next fiscal? We have seen demand coming back after the withholding of purchases on account of GST and RERA in the interim. In terms of revenues, we expect a modest growth over last year's revenue. But the year has been good in terms of consolidating our base for the launch of the new platforms, and we expect to cross a revenue of Rs 400 crore in 2018-19. Further, we expect to see significant activity with the launch of our new commercial project, launches in the affordable housing portfolio, and a couple of launches in the plotted segment. With over 3,000 acre in its land bank and a development portfolio of over 20 million sq ft, Century Real Estate is among the largest owners of real estate in Bengaluru. Over 40 years in the business, the company’s growth has practically mirrored the growth of Bengaluru as one of Asia’s fastest growing cities. And now, Century has mega plans to venture into the affordable housing segment along with developing 7-8 million sq ft of commercial projects. P Ravindra Pai, Managing Director, Century Real Estate, elaborates upon the new foray, big investments and more in conversation with SERAPHINA D’SOUZA. Tell us about your venture into the affordable housing segment and the investment. Century has a strong experience in developing mid-income homes, having delivered more than 2,500 units. Lauding the vision of 'Housing for All', we intend to invest Rs 1,100 crore to develop 7,000 homes in the affordable segment in the next five years. We already own lands for these projects, which are at an advanced stage of approvals and are looking at launching the first project shortly. What about your plans to develop 7 million sq ft of commercial projects in Bengaluru over six years? The commercial portfolio has been developed considering the expected shift of the City Central Business District to Hebbal and the advantage Century has on account of holding multiple land parcels on the Airport Expressway in the city. We intend to develop 7-8 million sq ft in these locations, where the leasing risk is low and can create a steady annuity base. We want to create a Rs 2,000-crore office platform, where an investor brings in the initial Rs 1,000 crore and we bring in the required land and development expertise. We are currently in talks with investors regarding the same. The first project, consisting of ~1 million sq ft, is in an advanced stage of approvals and work is expected to start in March this year. Tell us about your procurement plans or requirements for upcoming or ongoing projects. In terms of procurement, the company works on turnkey contracts for development of projects. The same is accordingly factored while engaging with contractors for each project. We have best practices in place: the team works on a process-driven flow chart, which consists of prequalification, pre-bid meetings, bidding and techno-commercial discussion, which leads to the award of the contract. For upcoming projects, we require large cap contractors as well as suppliers who adopt fair business practices. Elaborate on advanced construction technologies that the company implements in its projects. Precast technology is gradually being adopted by several developers, builders and contractors in India because of the obvious advantages in terms of speed, quality, labour efficiency and cost of construction. This helps in saving up to 64 per cent of the time taken for similar projects using normal construction methods and technology. The use of this technology can bring down the construction cost by 10-15 per cent, and it could be deployed to bridge the demand-supply gap in the real-estate sector. Especially in the commercial and affordable housing segments, this technology is proving beneficial as builders are trying to capture demand early by speeding up construction using prefabrication technology, which allows the finishing of a building in 12-15 months as opposed to around 20-24 months using traditional methods. Besides this technology, we also use GGBS in concrete and soil-stabilising chemicals for our buildings. (Refer to box for precast as a smart alternative methodology.) What measures are undertaken towards quality, safety and training? We have an efficient quality control team and an elaborate procedure for executing every construction activity to utmost quality standards. We undertake regular training for all staff and toolbox talks with contractors and workmen at site. The mantra is to get our men to use the right tools, have the right knowledge and follow the right methodology for inspection. Safety is an integral part of the works we execute. From ensuring proper accommodation for workers, providing all the required personal protective equipment to workmen and empowering them with proper knowledge and necessity for safety, we give thorough attention to safety. How do you raise funds and ensure the desired RoI in your projects? Project funds are raised based on the project requirement; accordingly, we raise a mix of equity, debt and construction finance. We have great relationships with existing financing partners and raise additional financing based on project requirements. The project RoI is taken care of by ensuring lower blended cost from a mix of debt and construction finance, and following a robust business plan and phasing strategy, which ensures the desired return. What will the company’s focus be going forward, and why? We look at having a varied but considerable demand and returns on our diverse projects. Considering our strengths and the current market scenario, going forward, the company intends to focus on commercial development by building a stable rental asset platform on prime lands where risk is low and we can develop a steady annuity base; affordable housing through development of mid-income compact houses, which will contribute to the monetisation of Century's land holdings; and plotted development through parcels in peripheral areas suited for plotted development. What are your plans for the 3,000-acre land bank you have in Bengaluru? Along with the four affordable housing projects and office projects we plan to develop, we are also planning to launch about 1,350 plots this year in two projects. At present, the company has a mix of residential and plotted development projects in and around Bengaluru. Plotted development will continue to be another area of focus for us. How has the year been for the company and what are your target revenues for the next fiscal? We have seen demand coming back after the withholding of purchases on account of GST and RERA in the interim. In terms of revenues, we expect a modest growth over last year’s revenue. But the year has been good in terms of consolidating our base for the launch of the new platforms, and we expect to cross revenue of Rs 400 crore next year. Further, we expect to see significant activity with the launch of our new commercial project, launches in the affordable housing portfolio, and a couple of launches in the plotted segment. The precast benefit Precast concrete is an alternative to conventional brick-and-mortar construction methodology. In this, steel bars are placed in metal boxes and concrete is poured in them. Once the concrete sets, the slabs are cured—a process that removes rough edges, smoothens the surface, and makes the slabs capable of supporting heavy loads. Once all the elements in each slab are in place, they are transported to the building under construction by truck, lifted by cranes and placed in slots to form the walls of an apartment, leaving space for electrical fitting and windows. This allows the construction of a single floor in a span of eight days compared to the traditional process, which takes up to 12 days or more. Once the slabs are in place, painting begins almost immediately. Also, there is no need to plaster as curing smoothens the wall surfaces, thus cutting the process down by another week. FACT SHEET Year of establishment: 1973 Top management (Promoters): Dr P Dayananda Pai, Founder; P Satish Pai, Founder; P Ravindra Pai, Managing Director; P Ashwin Pai, Executive Director; Mahesh Prabhu, Executive Director; Dev S Patel, Executive Director No. of employees: 275 Centre of operation: Bengaluru Ongoing projects: Plotted developments - 2; residential developments - 9 Upcoming projects: 2,000+aparments and 8,000+plots. Completed projects: Residential developments - 11; commercial real estate - 3 JVs: Nine Turnover: Rs 253 crore (2016-17) with projected turnover of Rs 300 crore in 2017-2018. To share your building experience, write in at feedback@ConstructionWorld.in