Friday, May 30, 2008

Dream Houses

Aniruddha Deshpande is aiming to create a new kind of township. Sucheta Dalal and Debashis Basu met him in Pune and heard his interesting plans

A few kilometres from Pune, a new township called Amanora is taking shape. It is the brainchild of Aniruddha Deshpande, a man who was known for a long time as someone who brought Motocross to India in the 1980s and a regular participant and winner of the gruelling Himalayan car rally. Given this background, it should be no surprise that his plans for Amanora are Himalayan in scale. It is a Rs4,500 crore, fully wired, intelligent township that will be controlled by a central data system. All homes will be IT-enabled to monitor everything from the daily vendor system to the security. Every resident will have a portal in the Intranet that will be connected to various vendors. Explains Deshpande: “You can order anything from any shop or any hotel in the township through this portal. If you are going out of town and need less milk, then some simple clicks on a smart screen will allow you to change your requirement from, say two litres to one. The laundry, the housekeeping and any other supplier will be connected to this portal.”

Deshpande calculates that one needs 68 such functions or verticals to run a township and the cost of such a data-centre would be Rs100 crore. It is not viable to spend this amount for constructing a few thousand houses. But then Deshpande is not setting up a few thousand houses; he is creating a township of 30,000 at which the data-centre becomes very profitable. The centre will be set up by a township management company called City Development Corporation, which is controlled by Deshpande.

In fact, the Amanora concept changes the relationship between the developer and the buyer. You don’t get to buy an Amanora property; you lease it for 999 years. Will this be acceptable to buyers? Deshpande’s rationale is: “We will change the customer into a citizen. So we don’t sell you the apartment; we give it to you on lease and we provide you water, electricity, education, healthcare, a marketplace, entertainment, gardens, security – everything that you need. We will be able to offer this at a much lower cost and much higher quality because we will be able to negotiate better terms as a bulk buyer of water, electricity and everything else from the suppliers.” He proposes many novel solutions to ensure that Amanora’s infrastructure remains top-class. One such is a water bank or dam, which he admits is nowhere near being accepted by the government. But, he says, “The government is short of money for irrigation projects. We are willing to spend money to dam the water and sell it to the Pune Municipal Corporation. We want to be able to sell the surplus water at the rate that the irrigation department sets for water.”

How did Deshpande come into this business and develop these novel ideas, when he is neither an architect nor an engineer? It was – as happens with most entrepreneurs – a matter of chance. “Both my parents are doctors and nobody in my family is into business. I have been only in the real estate business so far, except for an automobile dealership that I had for a few years till 1988.” That too happened because Deshpande was connected to automobiles in an indirect way. “I was organising motor sports in India and was vice-chairman of the Federation of Motor Sports in India for a long time, and then of the Pune Automotive Racing Association. I also used to race and won the Himalayan car rally in 1980-81. I also started the Motocross here in Pune and we even hosted the world championship at the Nehru Stadium. I was the executive chairman of that body for a long time – almost eight-nine years. We had collected Rs35 lakh, which was a big amount for a sports body in 1988.” After the world championship was over, there was a lot of infighting and so Deshpande quit. As soon as he resigned in 1988, he stumbled into the real estate business quite by chance.

Deshpande had a friend who had a 5,000 sq ft plot in Bibwewadi in Pune. He asked the friend whether his father would let him develop the plot. He replied, “I don’t think he will, because he is looking for a well-established developer.” Deshpande said, “If we tie up with an architect and a developer, will he give it to me?” This architect was a member of the racing association. Deshpande also knew a developer who had done construction for 10 years. “The idea was that the we would take two flats and the developer would sell the remaining six apartments. All of us went to meet my friend’s father.” He told them, “If you three are going to do it, then I am willing to take the risk; I will give you my plot.” The hitch was that the trio had to make a down payment of Rs120,000 but did not have any money. They suggested that bookings would be announced in six to eight months and once the cash was raised, they would hand over Rs120,00 to the plot-owner. The owner agreed. They completed the project in six months and Deshpande has never looked back ever since. “We did 10 projects in that area alone. Many people saw the quality of the project and approached us with their plots. All the plots were the same 5,000-sq-ft size. That was how I got into this business. It was by default. Nothing was planned until after I resigned from the Pune Automotive Racing Association. Deshpande does not rally anymore but his passion for cars has not diminished. “Every time I go to London, I rush to the automobile showroom on Park Lane to see the gleaming models of classic cars,” he says.

Building small residential projects is one thing but taking on the task of creating a landmark township on a gigantic scale is quite another. How did Deshpande get involved with Amanora? Before Amanora, he was involved with another unique project, called Lavasa, which is a township atop a hilly area, near Pune. Lavasa is today billed as a hill-station where you can live, and travel to work in Pune. When Deshpande started work on it, it was the most unlikely destination. “It had no road, no hospitals, no hotels, no communication facilities, no educational facilities, nothing. For the first one year, we used to get off from our cars and walk for two hours to and from the site each way. No developer would walk four hours a day to buy land, especially six years ago.” Why did he take the trouble? “The only reason was that nobody had built a private hill-station after the British left India.”

Deshpande bought his quota of land and then applied to start a project under the Maharashtra government’s hill-station policy. However, having developed the project up to a point, he has just sold his interest in it to Hindustan Construction Company, of Ajit Gulabchand, who is supposed to be close to Sharad Pawar.

Deshpande claims that the Lavasa project was planned very well and has won prizes all over the world for master planning. “A very sensitive environmental planning was done with the help of the UN Environment Department, because Varasgaon, where Lavasa is located, is one of the 18 bio-diversity hot-spots but was the most degraded. In the first four years, with the help of the government officials, forest authorities and everyone involved, we planted 300,000 trees. The UN officials in Paris were sceptical that we would be able to plant even 100,000 trees – which is what we had promised.” Deshpande sold out his stake in Lavasa when the project became large and banks insisted on his personal guarantees for loans which were growing too large for comfort.

Apart from Amanora, Deshpande has planned two other townships. The next one is at a lower price point (between Rs10 lakh-20 lakh), deploys a new fabrication technology (consumes less of cement and uses a chemical that expands) to lower the cost and will come up in less than 1,200 days. The township will have all basic facilities including and a transport hub to connect Pune. The third project is a golf estate – a very high-end project with only golf villas. It will have 10-12 towers and will offer an unrestricted view of the golf course. Deshpande has already bought the land and will launch the project before the end of the year.

Can Deshpande take his model and learning across the country? No way, he says. He explains: “Real estate in India is not a national game. I have been going to Bangaluru, Gurgaon and Chennai and studying these places for expansion. I have good contacts there through my interest in motor sports. But it is not easy to buy land if you are not a local developer. If you are doing a joint venture with a local developer, then you are not in control. So, Mumbai-based developers cannot easily do projects in Pune or Delhi-based ones in Chennai. I can buy 500 acres of land in an instant in Pune because I know hundreds of people and how they are connected to whom, etc. But I will be at sea in other cities.” In any case, for now, Deshpande’s hands are full – delivering what is aimed to be a showpiece of India’s frenetic real estate development.


Lilli said...

Property brokers and agents say that stabilisation in Pune's real estate market reflects the trend prevalent in the country's property segment. The country's economy is facing a slow-down and it is the same case with the construction sector as well.

Ramesh Naik from Naik Navare Association, a property brokerage firm, explains that oversupply of property, especially in the residential segment is adding to this trend. "Most of the construction projects are in their initial phases. Hence, the property developers are in a hurry to sell their projects. The projects are priced comfortably. And the developers are luring home seekers with gifts and rebates. Some property developers are offering reduced Equated Monthly Installments (EMIs) and some are wavering parking fees for housing units," says Naik. He adds that many transactions are happening the actually figures are difficult to compute.

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