It is a classic of entrepreneurial growth and evolution. Starting off as Omaxe Builders Private Ltd in 1989, executing simple civil construction and contract jobs, the company has metamorphosed into a real estate development company riding on the real estate boom across the country. The name changed from Omaxe Builders to Omaxe Construction Ltd in 1999 and finally to Omaxe Ltd in 2006 is indicative of this change. Going public this July, the company has corporatised itself in a bid to cash in on the vast, emerging opportunities. It posted revenues worth Rs 1,440 crore in 2005-06 and crossed the Rs 1,000-crore mark this year in September. Founder,, chairman and managing director Rohtas Goel, a qualified civil engineer and first-generation entrepreneur has dreams of making it bigger and have a pan-Indian presence from its current concentration in north and central India. He shared trends in the real estate industry, the challenges and Omaxe’s future plans with Satya Naagesh Ayyagary.
There seems to be an across-the-board growth. But which are the market segments that you see fuelling growth?
Going forward, commercial office space will play a major role in the growth of the industry compared to earlier. On the residential property side, there will be growth but there is a huge demand and supply gap. A real estate property is not a commodity that can be transported. Moreover, you need to make a deep survey of the geographical pockets and act more intelligently and innovatively to make a success of the business.
Growth in metros appears to be saturating while Tier II and Tier III cities and towns seem to be the growth drivers. How do you see it?
Future growth is going to come from Tier II and Tier III cities and towns. Take the example of the IT and ITeS industry. Owing to the recent appreciation of the rupee, most Companies have to shift to Tier II and Tier III towns owing to high rentals in the metros. Moreover, if you go back a little bit in time, the high growth and consequent shooting up of prices and to some extent saturation has given birth to the growth of real estate development in Noida and Gurgaon. So, there has been greater appreciation in that segment. Further, if you take the National Capital Region (NCR) as Delhi which includes surrounding areas like Gurgaon, Noida, Faridabad, Sonepat almost till Jaipur, these cities
have grown at a much faster pace than the metros.
Omaxe has been privately held for long until going public in July this year. How is it different running this new entity and what have been the challenges?
There have been no problems whatsoever at all. Of course, there is more transparency, more corporate governance norms in place, etc. One cannot do business in an individual style. Now there are lakhs of shareholders that we are accountable to and have to do business accordingly. Also, we have to inform the Sebi and the NSE of any decision we make. But let me say that I feel good about it for many reasons. One, we can raise more capital that too easily which will fuel our expansion and growth. Two, we are more exposed to the world, interacting with global players in the industry, real estate funds and there is more understanding of the global real estate business. Earlier, it was only my interest. Today there are lakhs of investors. Being rich and wealthy is different. Today we feel that we creating wealth for the nation as a whole.
There is a perception that the real estate business has a strong presence of black money. Comment.
I don’t agree with that. It might have been the case earlier. Now, money comes from institutions. In fact, white money in this business has increased compared to earlier. As far as Omaxe is concerned we make cheque payments for our purchases and accept payments for our properties only by cheque. So, it is all transparent.
What do you see as roadblocks to the growth of the real estate industry?
The biggest roadblocks are the interest rates. If interest rates come down, EMIs for customers will come down. Consequently houses will become affordable to many people, especially in the mid-segment. Though I cannot say for sure, I reckon that interest rates should come in the next six months.
Your company has been predominantly operating in north and central India. Any plans to expand your footprint?
Since we are Delhi-based, our operations have been concentrated in this region. However, we are now foraying into south. We have recently purchased 20 acres in Visakhapatnam where we will commence a project. We are also looking at Hyderabad and are in talks with the authorities there. We also signed an MoU with the Government of Rajasthan to set up an SEZ in 12,500 acres. The proposal has been cleared by both the state and the Centre. Now we are in the processing of acquiring land for the project. Of course, we want to be a national player.
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