REAL ESTATE BANGALORE

Change with the times

The Bangalore-based Mantri Developers has come out with compact apartments about 20-25 per cent smaller than what was commonly sold till last year. A residential unit now is about 1,000 sq.ft for a two-bedroom apartment instead of 1,300 sq.ft earlier.

This has helped Mantri Developers grow 20 per cent in the April-June quarter this fiscal. “We changed the specifications and made apartments more compact for our Mantri Synergy project in Chennai. That resulted in more than 60 per cent sales in the three towers that the changes were made,” according to Mantri Developers’ Chairman and Managing Director, Mr Sushil Mantri.

The project, which was originally conceived with nine towers of 90 units in each. But three towers were reconfigured and now have 120 units in each. About 30 per cent of the other towers are still unsold, “but we do not have much to worry,” Mr Mantri said. The project, located on Old Mahabalipuram Road, has been priced at Rs 2,800 a sq. ft.

“Change in strategy has delivered good results for us, and we have replicated this model for other projects too in Hyderabad, Bangalore and Pune. And we have been quite successful in all these cities,” he said. At Hyderabad, the company has launched a project where 70 per cent of the 1,000 units planned would be compact units, while 30 per cent would be bigger. According to Mr Mantri, over a third of the project, at Rs 2,800-3,300 per sq.ft, has been sold in the two months since its launch.

Defining the changing outlook in the real estate sector, Mr Mantri said there is no change in the customer profile. “Customer profile remains the same. What has changed is people’s mindset. They have become more conservative in terms of budget for that priced home-buy,” he added.

ANJANA CHANDRAMOULI Plea to extend Sec 80IB benefits The Union Budget for 2009-10 should extend tax benefits to developers under Section 80IB and expedite introduction of real estate investment trusts (REIT) and mutual funds (REMF), according to Mr Surendra Hiranandani, Managing Director, Hiranandani Upscale Group of Companies.

In a press release, he said the tax benefits under Section 80 IB will provide an incentive to developers and increase customer confidence in the industry. The real-estate sector hopes the Government will focus on regularising tax and other issues related to REITs and REMFs.

Currently, investors have adopted a wait-and-watch approach as the Government has a tight control on entry and exit of FDI. While entry of FDI has been broadly clarified, there are number of cases where conflict and ambiguities exist between the RBI and the I-T department creating hurdles at the time of repatriation of the profits. Clarifications on these guidelines could introduce a renewed interest in this sector.

There is an anticipation of a possible increase in excise duty on cement. This coupled with service tax and TDS, both of which are currently levied on the developer, provide little incentive for the industry to grow, he said in the release.

The SEZ policy is not particularly beneficial for the IT/ITES/BPO sector. The STPI policy must be extended, which will also give exports a much-needed boost. Section 80 IA for IT parks also needs to be continued for the same reasons. Clarifications on these issues will help boost investment, says Mr Hiranandani. — Our Chennai Bureau
Big growth in Brigade Group’s business

Real estate developer Brigade Group has seen a 200 per cent jump in business in the April-June quarter of this financial year with sales of over 100 residential units. In June we sold about 60 units, hiked prices by 2-3 per cent in May and June and brought down the discounts given earlier, said Mr M. R. Jaishankar, Chairman and Managing Director, Brigade Group.

He said Brigade’s debt stood at Rs 428.6 crore, as on March 31, 2009, with the current debt-equity ratio at 0.42. There is no constraint from debt funds, “in fact, we have an unutilised debt of Rs 300 crore,” said Mr Jaishankar.

He said the company was considering to raise up to Rs 1,000 crore through private equity for hospitality projects. It is open to entity-level dilution for its wholly-owned subsidiary Brigade Hospitality Services and special purpose vehicle (SPV) level sourcing. JP Morgan would help the company identify private equity investors, he said.

The company is also not for qualified institutional placement (QIP) now. “We prefer QIP to happen at a much better valuation than what it is now,” he added.

Mr Jaishankar said that the company plans to dilute 20-22 per cent stake at the SPV level for its 120-acre township project in Devanahalli. Over the next one year 12 projects, totalling about 12 million sq.ft of development, would be completed.