Q1. What is your outlook for the realty sector in India?
The Indian realty sector has borne the brunt of the current slowdown in the last few quarters. Leasing and sales transactions were both very inactive during the last quarter with rentals and values being revised downwards.
The demand for commercial space from corporates has witnessed a correction, especially in the major cities. Particularly, the financial services and IT sectors have largely refrained from committing any major capital expenditure.
Due to an adverse supply-demand mismatch and unavailability of financing options, there has been a substantial slowdown in the construction activity as well. Most new projects remain on paper and many of them have been postponed.
With the economy turning around, going forward we do not expect any further correction in the coming months. We expect the level of transactions to gain traction in the medium term. Similarly in the residential space the prices have become very attractive and we will see some action in this segment.
Q2. How well is Sunteck Realty placed vis-à-vis its peers to face the current challenges in the realty sector?
Due to the company`s unique business model it has managed to face the current challenges. The company has structured deals with landlords which are mutually beneficial. A cautious level buying approach with focus on premium properties within the heart of cities has also helped to a great extent.
The company has always adopted a cautious and conservative approach and never leveraged itself completely. The company enjoys a good liquidity position as fixed costs are low; with negligible interest burden and a regular cash flow through rentals which are not leveraged.
The group also enjoys very good credibility in the market and has leading business houses and financial institutions as its JV partners and investors. The strong financial stability has helped the group service a loan at rates much lower than the prevailing market rates.
Q3. Please share with us your view on the current economic climate.
The global meltdown coupled with severe liquidity crunch and high interest rates have definitely impacted the economic climate.
But with the new government back in power, announcement of stimulus packages by the government and slashing of the mortgage rates by banks a revival is quite possible in the next few months.
RBI`s decision to cut rates has increased India Inc`s hope of further rate cuts by banks. The industry is hopeful that this would encourage demand from consumers across core sectors.
Q4. Any change in your expansion plan due to the current environment?
All our existing projects and plans for the next 2-3 years are on track. Most of our projects will take 18-36 months for completion. By the time the projects are ready; we expect the economy and sentiment to be on a huge upswing and will look at benefiting from the same. We treat this slowdown as an opportunity to expand and buy, of course after a careful due diligence procedure.
Q5. To stimulate the realty sector what measures do you wish for in the forthcoming budget?
The key to sustaining India`s growth rate lies in developing India`s infrastructure. Keeping this in mind, the government should give the much needed impetus to the sector. We also feel that mass housing projects and projects in Tier II and Tier III cities should be given a major boost. Infrastructure development needs to grow at the same pace as real estate. Both these sectors need to work in tandem and complement each other.
Today cities such as Pune, Bangalore, Hyderabad, Nagpur, Jaipur have emerged as major commercial hubs due to the infrastructure and support facilities developed in and around these cities. For e.g. Pune`s commercial success can largely be attributed to the Mumbai - Pune Expressway. It was only after this development that IT companies, BPO`s and MNC`s set up operations in Pune.
Q6. What is the long-term vision of the company? Where do you see the company 5 years down the line?
We aspire to have our projects in prime locations nationally as well as internationally. We shall strive to be a leading player and the first choice in the real estate sector with a diversified portfolio comprising of residential, commercial, it parks, multiplexes, malls, retail, hotels, service apartments and entertainment parks.
Q7. Would you like to convey any message to the shareholders and investors of the company?
We are grateful to our investors and customers for the continuous support they have provided all these years. We want to create shareholder value by focusing on quality, innovation and customer satisfaction.
Q8. On a lighter note, your favorite books/ personalities that have influenced you the most?
`Winning` by Jack Welch is quite motivating and makes for an interesting read.