Jeh Wadia, managing director of Bombay Realty, spoke on conceptualizing projects in a tough real estate scenario and the impact of changing building norms in Mumbai
By Madhurima Nandy | Livemint.com
It is not often that a real estate start-up of sorts enters the business with nearly 10,000 acres of land, including 700 acres in Mumbai alone. Possession of clean-titled land is half the job done for any real estate company in India.
Though it began work on a large mixed development project on a mill land in Dadar, Mumbai a few years ago, Bombay Realty was formally formed only last year. It culminates the Wadia Group’s real estate interests into a new enterprise set up to develop assets and land owned by the group and the family across cities.
Bombay Realty, a part of Bombay Dyeing and Manufacturing Co. Ltd, will contribute more than half of its revenue towards the development of properties and retiring the group’s high-cost debt.
In an interview, Jeh Wadia, managing director of Bombay Realty, spoke on conceptualizing projects in a tough real estate scenario and the impact of changing building norms in Mumbai. Edited excerpts:
What is the strategy to develop these 10,000 acres of land?
From a land bank perspective, these are assets that are there with us and the land that we have in Mumbai is of very high value. We are in the process of monetizing this land, where we will develop a part of it, and will also sell some of it. We will be announcing projects in the next fiscal.
What are the challenges in the Mumbai real estate sector?
The new DCR (development control regulation) amendments… mean new designs, new plans for projects that need to be resubmitted because you can’t re-engineer old plans. There is short-term pain, but there is long-term gain. There is a lot of transparency in the new DCR compared with earlier when there were a lot of concessions given out. All those concessions have been translated into premium FSI (floor space index, or development rights), for which you need to pay the government now.
But the payback should be that the construction cycle of a project should be reduced by half and the efficiency should be measured in how fast project approvals are given.
Give us some insight into the nature of the projects that you are developing.
Our first two projects are in Worli and Dadar, and both are mixed-development projects, a concept which isn’t really there in Mumbai. Both projects will have a mix of residential, high-street retail, a hotel, and the ultimate aim is that customers don’t have to leave it and go out, because it’s a city within a city.
The product mix will differ in each project. In Dadar, we will do residential first with a customer in mind who is probably a Mercedes or a BMW type of user. The Worli project offers a seven-star experience for a buyer who drives a Rolls-Royce Phantom.
What are the other project launches being planned?
There is a 100-acre mixed-use project in Thane (on the outskirts of Mumbai) that we will announce, and we have 200 acres of family and trust land in Malad (a Mumbai suburb), which is fragmented in the current state. We are evaluating how to go about with the development, revenue per sq. ft, etc.
Property analysts say that with prices so high, a correction is impending, particularly in the high-end south Mumbai market. What do you think?
There is no question of an over-supply in Mumbai, particularly in south Mumbai. There is little quality supply of high-end projects like ours in these areas.
People don’t mind moving out of old buildings in south Mumbai and moving into newer apartments which provide high-quality lifestyle. We have maintained a straight line in prices, where we will not sell at a discount but we will also not increase prices rapidly. We have had customers walking into our projects asking for a price discount, but as a company we don’t believe in discounts.
At the Wadia International project in Worli, you are developing a luxury retail high-street. Tell us about the concept.
It’s a luxury destination filled with shops, bars, restaurants, open spaces and entertainment zones. We decided to concentrate on launching the high-street first that should start functioning in the beginning of 2013, because the operating expenditure of malls is 35% higher. The mall will be launched in phase II.