House is a good investment if one has a three-year horizon: Anand Piramal

Piramal says the company would look at a CAGR of 20 per cent over the next decade, despite the subdued property markets

Piramal Realty has announced a four-fold sales jump in calendar year 2018. ANAND PIRAMAL, founder and a non-executive director at Piramal Enterprises, tells Raghavendra Kamath the company would look at a CAGR of 20 per cent over the next decade, despite the subdued property markets. Edited excerpts:

Where does Piramal Realty stand in the hierarchy of developers?

We are the second largest property developer in Mumbai in terms of sales and among the top five in the country.

Your plans?

To double the size of our portfolio in the next two years. Currently, we are developing 15 million sq ft.  We are also looking to raise capital for residential and commercial projects. We plan to grow our own projects and do joint ventures with other developers and land owners.

The perception is that your projects are expensive.

No. We give more value and better quality. We are not higher than the market.  Our numbers show that if the project is at a right location, the brand is right and units are affordable, that project sells well.

Any plan to enter new cities or new areas such as co-working spaces?

Not for residential; maybe for commercial (on entering new cities). But, there is so much of opportunity in Mumbai. We are launching a new tower each for our projects in Mumbai.

There is a perception that projects in South Mumbai are struggling due to oversupply.

Of our Rs 3,500 crore of sales, two-thirds is from our Byculla and Mahalaxmi projects, which are in South Mumbai. Not many launches have happened in South Mumbai. With the coastal road, South Mumbai will do well.

Home prices have not risen for three years. So, should individual investors buy new homes?

It is good from the point of the medium term. If you have a three-year horizon, it will be a good investment. 

When do you expect a broad recovery in residential sales?

Recovery is already happening.  Real appreciation (in prices) will happen in two-three years.

How do you feel about the current real estate market?

Overall, I am optimistic about the sector. Most good developers are doing well. Many others are struggling and fly-by-night operators are leaving. The top 10 developers are increasingly taking a higher share of the market. Land prices have corrected by 10-15 per cent in the past five years. Today is a good time to buy land and develop properties. The NCLT (insolvency tribunal) and bankruptcy code have come into play faster than what people had thought.  Many developers and industrialists have become realistic about prices today. 

The current NBFC (non-bank financial companies) crisis has crippled the funding of developers. How do you look at it?

Sentiment is not great in the NBFC space. Liquidity is frozen. We hope banks will pump in more money. NBFCs have retracted a bit from funding.  Small developers are struggling and there will be more consolidation in the sector.