Property rates slated to head north in South

The Puravankara group is perhaps among the only few construction companies which has focused its operations in South India with projects spread across several prominent southern cities like Bangalore, Kochi, Chennai, Coimbatore, Hyderabad, Mysore etc.
With nearly three decades of operations, the group's flagship company Puravankara Projects Ltd has completed many residential and commercial projects covering approximately 3.53 million sq ft of saleable area and is currently developing another 15 million sq ft across South.
Along with new projects, both residential and commercial, the company, which recently got debuted on the bourses, has now chalked out plans for a pan-India presence along with ventures in foreign countries.
In an exclusive interview to Rommel Rodrigues of this website's newspaper, the young man at the helm of the affairs, Ashish Puravankara, Director of Puravankara Projects Ltd, discusses the industry, his company's current plans and future strategy. Excerpts:
What is the current trend in the real estate markets in the country, especially in the southern regions?
To describe in one word, the current trend in the real estate market in the country as can be described is highly promising. The markets in the Southern region, however, are much more upbeat with encouraging potential.
The real estate markets in these regions have come up from a slight temporary recession which was witnessed a couple of months ago due to variety of reasons.
Are prices still firming up or stagnating, and which areas are seeing activity and which places are laggards?
In the past few months, from the first quarter of the current fiscal, the markets had witnessed a slight slump and a slight price correction, say in the range of about 5 percent in the south. Though it varied from region to region.
This was largely due to the hardening of interest rates. Now with that, this trend has reversed to some extent, the activity in the industry is again on full swing and prices have firmed up significantly. However, I must add, in the last few months, for us at Purvankara the impact was almost negligible, as we follow a completely different philosophy of business.
First of all we handle the entire spectrum of work, from inception of the project to handing over the possession all by our own company people and execute totally in-house.
Secondly we deal directly and largely with end users, so we typically don't bring in any element of speculative trades. Only people who will be eventually utilizing their places will buy with a long-term perspective and thus will come at the current best price.
Talking about buying activities across the region, since our entire saleable areas are under municipal limits in all cities, all our projects are actively sought after.
Are there enough genuine end users as buyers, or are there speculative trades happening, which fuel escalation in prices?
Look, like any large industry, real estate, which has evolved over the past few years, is now booming. There will be all kinds of market participants. There will be individual end-users, corporate buyers, investors, brokers etc.
However, in the Southern markets, buying an asset is a highly sensitive and planned decision with less of speculation involved. Besides, as I said, since our company deals largely with actual home or office buyers we do not encourage speculating in the industry.
So the prices in the Southern markets are likely to rise in the future?
Please look at it this way. Prices across the other regions have been rising at a steady double digit pace over the past few years. For example, a market in Gurgaon, in the outskirts of Delhi, has risen from Rs 2000 a sq ft to over Rs 4000, upto Rs 5000 in the past two years. On the other hand see the markets in Bangalore, Chennai, Hyderabad or Kochi. To take Chennai for example, the most premium construction within the municipal regions have risen by nearly 40 per cent in the last one year and is currently in the range of about Rs 3500 per sq ft. At these prices there is enough scope for upward rise of about 20 per cent per annum in the Southern markets.
Kochi is really seeing a big boom in the property markets already. I would say that, for long, the Southern markets were undervalued.
What are the various projects your company is currently implementing and give us a little indication of the future projects?
Currently, we are doing 4 projects, 2 commercial and 2 residential projects in Chennai, 6 residential projects in Bangalore and 5 in Kochi and one commercial project in Hyderabad, with a total of 14 million sq.ft of saleable area. In Chennai, we are already doing the residential project at IT Corridor on OMR in Chennai and at Valsaravakkam, while we are also working on a new project of 2000 apartments in Chennai at Pallikaranai near Velachery, to be launched soon. In Bangalore there are various ongoing projects at Kanakapura Road, Yelahanka and Sanjaynagar.
In Kochi we are doing large projects at the Seaport-Airport Road and Kakkanad with new projects to be launched at Marine Drive, then, we have residential projects in Mysore at Sreerampura. Going ahead in the next 6 months itself, we will be launching large projects at various location in the South, totaling 11.85 million sq ft. Our villa project in Colombo is slated to be launched in about a month's time.

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