The year 2016-17 was a year of landmark reforms ranging from the formation of a strongregulator on one side to easing of foreign investor norms on the other. The year alsowitnessed a major thrust on affordable housing a strong revision to the REIT guidelinesand the passage of RERA- the most significant reform that the real estate sector has seenin the recent times.
Much has happened in the macro environment - successful demonetisation; introduction ofGST proceeding in the right direction; commencement of RERA; a booming stock market;monsoon expected to be normal et al.
Full credit to our Hon. Prime Minister for successfully managing the demonetisation ofINR 500 & 1000 currency notes. This has resulted in lakhs of crore rupees gettingdeposited in the Banks resulting in increased money in circulation due to reduction ofblack money increase in tax collections & number of tax payers expected reduction incorruption lower lending interest rates (good for business & industry) increased useof digital currency among other advantages. Our Prime Minister debunked the criticism bymany reputed economists and showed he means business by coming up with slew of wellthought out supporting measures. Prime Minister Modi's vision backed up by clear cutstrategies & implementation is sure to make him the BEST Prime Minister our countryhas seen apart from making him an enviable Statesman to reckon with in the world order.
With the announcement of tax rates the suspense surrounding the much anticipated GSTseems to be over. Now it is a question of ensuring it is implemented both in the letter& spirit. The exemptions given and rates announced by the committee of financeministers seems to be very fair. By & large GST should help business & industryin overall reduction in costs which is expected to be passed on to the ultimate customer /consumer. But there would be a settling down period and confusions / misinterpretationgalore during 2017-18 at the least.
Similarly there is bound to be confusion in the implementation of RERA. There are noexperts in the industry or in the consulting community or in the government. Everyone willhave an opinion the correctness of which will be known over time once the RERA Authority/ Tribunal starts passing orders. While RERA will have long term positive effects on thesector with no entry barrier resulting in all kinds of questionable characters enteringthe business it is also bound to add cost due to delay in obtaining additional approvalsfrom RERA authority before a project is launched. The real estate sector already suffersfrom the problem of dealing with too many civic authorities who have been convenientlylet off by the government from the regulations of RERA. Once the sector recovers from theimpact & negative sentiments of demonetisation the real estate cost / prices shouldgo up at least by 10% due to the provisions of RERA and the recently revised NationalBuilding Code for new projects.
Affordable Housing will soon become the flavor of the season for developers andconsumers alike. Rightly so what with more than 20 mn. homes to be built in the next 5years to meet PM Modi's noble target of Housing for All' by 2022 to coincide withthe 75th anniversary of Indian independence. For the mission to succeed thestate government and civic authorities should give incentives (if not subsidy) by way ofallotment of government / slum redevelopment land reduction in stamp duty reducedapproval fees for building plans water sanitary & electrical utility connections foraffordable housing projects.
Completion of 30 years in business is a significant milestone. One would have seen manyhighs & lows and weathered many a storm. It was no different for Brigade. What startedas a single project venture has grown into what it is today. While I look back at theachievements accolades awards and landmarks created during the last 30 years with asense of pride & satisfaction I realise that it is more important to look forward onwhat needs to be done to continue to survive grow & flourish to meet the aspirationsof all stakeholders for the next 30 years. It is a happy coincidence and a fittingtribute that during the 30th year of our operations we completed 30 projects(across residential office retail & hospitality segments) adding up to 10 mn. sq.ft. in area.
Our Real Estate business has done relatively well inspite of various factors bothinternational and national impacting the business. The group has sold 1.62 mn. sq. ft. ofReal Estate space aggregating to Rs. 956 Crores with an average realisation rate ofRs. 5876 per sq. ft. for the financial year 2016-17. A total of 16.43 mn. sq. ft ofresidential space is under construction. The Lease Rental segment has contributed Rs.266 Crores to the top line of the Company. About 1.89 mn. sq. ft. of commercial and retaillease space is currently under construction. The Hospitality segment revenues for thefinancial year stood at Rs. 193 Crores. The occupancy levels at Sheraton Grand wasat 81% and Grand Mercure Bangalore was at 73%. The Group presently has 704 operationalkeys which will scale upto 2000 keys in 3 years from now.
The scheme of arrangement for restructuring the hospitality business of the Company into wholly owned subsidiaries has been approved by the Board. The same will be effectivebefore the end of the next financial year.
Your Company raised Rs. 500 Crores through a Qualified Institutional Placement inApril 2017. The issue received a very good demand from both domestic institutionalinvestors and foreign institutional investors.
Your Company will be launching 11.53 mn. sq. ft. during the financial year 2017-18.This will comprise of 5.02 mn. sf. ft. of real estate space 5.76 mn. sq. ft. ofCommercial Space and 0.13 mn. sq. ft. of Hospitality Space.
As we usher in a promising era the dynamics of business is fast changing and it isimperative for us to excel fulfilling stakeholders expectations and building positiveexperiences in what we deliver to stakeholders. Thank you for your continued patronagewhich only motivates us to leap to the next level of growth.
M R Jaishankar
Chairman & Managing Director