To invest Rs 2,000 cr on compact houses
Brigade group, Bangalore-based real estate developer, is testing the waters of affordable housing with ‘Brigade Value Homes’ which it plans to launch in Bangalore. The company is looking to invest Rs 2,000 crore on building compact residential properties in the next four years.
The company will build low-cost residential projects on Kanakapura Road, Devanahalli Town, Mysore Road and K R Puram in Whitefield, totalling 10,000 homes with a base price in the range of Rs 10-26 lakh, of which 2,500 units will be available for registration in the first phase.
A one BHK flat of 500-550 sq feet costs around Rs 10 lakh to Rs 13 lakh. Two BHK with 850-900 sq feet is priced in the range of Rs 17 lakh to Rs 21 lakh while three BHK with 1,050-1,100 sq feet is priced at Rs 21 lakh to Rs 26 lakh. The company plans to launch the properties in the next 6-12 months.
“To a certain extent, the compact home project is a way to ascertain the demand for a specific location or a type of apartment. There is a huge demand at the bottom of the pyramid. With urban population expected to double in the next few years, we expect the demand for affordable housing to go up,” said M R Jaishankar, chairman and managing director, Brigade Group.
Funding for the new initiative will come through 1ô3rd each from internal accruals, customer advances and institutional funds. While the company has no plans to set up a subsidiary for low-cost housing, the Devanahalli project will be operated as an SPV with BCV Developers, a joint venture of Brigade Group and Classic Valmark. Other cities being looked at for future expansion under the affordable housing initiative are Mysore, Mangalore and Chennai. At Mangalore, the company has soft launched a residential project ‘Brigade Sparkle’ which will offer 230 units priced between Rs 18 lakh and Rs 25 lakh.
The Brigade group, with interests in residential, commercial property as well as hospitality is developing projects in these sectors and is expecting to get approvals for nearly 12-15 projects by March 2010. This includes projects in Hyderabad, retail property and business hotel in Chennai and SEZs in Mangalore and Kochi. It is developing close to 35 million sq feet presently and is looking to develop 12 million sq feet in the coming months.
Early this year, the company had spoken about diluting the stake of its wholly-owned susidiary, Brigade Hospitality Services (BHSL) for raising capital. Jaishankar said JP Morgan had been mandated for the purpose and that the company could look at a dilution of 25-30 per cent by the 1st quarter of 2010.
For projects in its hospitality sector, the company may look to raise Rs 300 crore to Rs 500 crore.