Arvind Jain, Managing Director, Pride Housing & Construction
ride Group does not merely focus on real estate but changing cityscapes. A pioneer in the luxury hospitality segment, as evidenced in the chain of Pride Hotels across India, the company went on to enter the residential and commercial real-estate space. For Arvind Jain, Managing Director, Pride Housing and Construction, this was ´the next logical step.´ Today, Pride Group offers a full residential spread from mid-range to luxury homes and, in the commercial segment, specialises in IT parks and built-to-suit office complexes. Jain shares an overview of the market and his company´s strategies with CW.
What has been your total investment in the real-estate sector?
That is a simple question. But unfortunately, with the kind of churn required to keep capital invested in real estate, the answer becomes complex. Nevertheless, we currently account for a turnover of Rs 600 crore and expect to hit the Rs 1,000 crore mark in the foreseeable future.
You have focused on sustainable construction....
Yes. It all begins with ensuring complete environmental site responsiveness. We use environment-friendly construction techniques and materials, ensure our green buildings provide natural sunlight and ventilation on each floor along with ultra-modern energy saving and water conservation. From the sustainability perspective, each project is cast in a brand new mould as site dynamics differ from location to location.
You are mainly Pune-focused with projects in Bengaluru and Mumbai; how do these markets compare?
From a bird´s-eye perspective, Pune, Mumbai and Bengaluru continue to be the cities where we see the highest demand in the foreseeable future owing to the fast pace of job creation. That said, the dynamics that drive these markets vary significantly. In Mumbai, the cost of land acquisition is extremely high and it is always a challenge, which affects the pricing of the end-product. Here, we see the highest demand coming from the budget-to-mid-income segments. Bengaluru and Pune are largely end-user driven markets and easier to work in. Both have the ability to grow as there are a lot of potential locations emerging.
What returns can one expect from these cities?
It depends on the right project in the right location, the right entry point in terms of investment budget and one´s investment horizon. Investors who pick projects under construction and have the ability to hold on for at least five to six years can expect to garner the biggest returns. On an average, all three markets yield around 15-20 per cent annualised investment growth and often as much as 30-35 per cent in some locations but again, this is not a given if one has not invested wisely.
Private equity investments in Pune's realty space were recorded at Rs 1,464 crore in 2013. Did this affect your company´s operations? We are more than adequately capitalised and do not rely on private equity movements. While we do tie up with funding houses for larger projects, Pride Group believes in maintaining financial self-sufficiency. That said, influx of private equity in the sector is definitely favourable for the market as it increases the supply pipeline and encourages developers to stay competitive.
How challenging is it to seek approvals?
The notorious lag in project approvals is definitely a problem for all developers, especially for larger developments such as townships. There is currently no quick-fix solution for expediting clearances. However, having all the requisite legal documentation ready for perusal is critical. If the documentation at the developer's end is incomplete or unsatisfactory, there are bound to be delays. We have ensured that all our projects are meticulously planned right from the approval stage. In other words, we plan our projects years in advance and are, therefore, able to secure clearances well in time. One example is our upcoming township in Charoli, Pune, for which we obtained green signals across the board many years ago.
What challenges do you face in this sector and how have you overcome them?
Market slowdowns affect all stakeholders but they do not affect every stakeholder equally. When demand slows down, developers with healthy capitalisation and an innovative and flexible approach are able to see their business through slow times more effectively. Pride Group has consistently prevailed through all market turbulences on account of having these factors firmly in place.
What is your wishlist for the new government?
Indian real estate has received step-motherly treatment on all fronts. The sector is now perceived as unfriendly to both developers and buyers. Over the past few years, the realty story has been a saga of missed opportunities, and a turnaround is definitely expected. This can only happen if the new government takes the necessary steps to make the market viable for sellers and buyers again. For instance, mechanisms for fast-tracking residential project approvals should be considered. This will go a long way in increasing supply and keeping property rates rational, especially in the larger cities. Also, the approval process needs to be speeded up for affordable and mid-income housing projects so we can narrow down the massive and longstanding supply deficit here. The government also needs to speed up infrastructure development. Many key projects are heavily delayed or pending, and infrastructure is extremely important when it comes to making real-estate development viable in emerging and established areas that have stagnated owing to infrastructure deadlock.
First-time property buyers need to be given better incentives for home purchase. Existing incentives are threadbare and nominal at best and completely insufficient to encourage fence-sitting buyers. Moreover, the new government must take all measures to make green housing projects more viable for developers and buyers. Finally, the government must reboot the regulatory framework surrounding real estate. As things stand now, the sector is far from being a desirable investment route for foreign funds because of unfriendly norms and the stubborn opaqueness of the sector itself. While better regulation will give Indian real estate a better image and make it more attractive to both domestic and foreign funds, a revamp of the current investment norms will help translate this renewed attractiveness into actual viability.
Year of Establishment: 1995
Top Management:
Arvind Jain, Managing Director
No of Employees: 350
Centre of Operations:
Pune, Mumbai and Bengaluru
Turnover: Rs 600 crore
Ongoing projects: Pride Soft City (Charoli) 400-acre township,
Pride Panorama, Pride Valencia,
The Spiers, Park Turquoise, Park Grandeur, Park Titanium, Pride
Gateway-Pune, Pride Wilasa
(Bengaluru), Park Royale (Mumbai)
Upcoming Projects: 1,100-acre
township in Bhugaon (Pune), Park Forest in Bibewadi (Pune), township in Hinjewadi (Pune)
Completed Projects: Park Street, Pride Silicon Plaza, Pride Platinum, Pride Corporate Plaza, Park Xpress, Pride House
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