Mumbai is out of the question for affordable housing: Niranjan Hiranandani

Plans to develop 2000 acre land in 5 years, against 550 acres in last 30 years

Hiranandani Group, best known for its township at Powai in Mumbai, developed 550 acres in the last 30 years. At 68, Niranjan Hiranandani, the co-founder and managing director, plans to develop five times the land at 25 times the pace in the next 5 years under his new initiative Hiranandani Communities. He spoke to Raghavendra Kamath and Abhineet Kumar. 

Edited excerpts:

Where is real estate market headed now?

Real estate is in recession after demonetisation, GST, RERA, and insolvency code. Four tsunamis have passed and so many developers have died in the recession. Though it is not entirely market driven as the environment is responsible for that. Regulations precipitated these things to happen. However, there are exceptions. We have done well in residential business and too well in commercial. 

Do you think commercial will play a larger role in your business now?

In the last two years, we have done business on the commercial side as much we have done in the last 14 years.  We have built 5.5 million square feet of commercial space in Powai in 14 years. And sold 4.2 million square feet to Brookfield for near $1 billion in Oct 2016. And in the last two years, we have built 5 million square feet and pre-sold three million square feet to TCS. We also sold two data centres to NTT of Japan. But our model is that of township. I think all our businesses will grow – be it residential, hotels, office, hospitals. My hotel has 90 per cent occupancy while others have 40 to 50 per cent. This is because our hotel is connected to our township. We create our demand and environment.

So where do you see your business in the next 5 years?

For 15 to 20 years, we did only Powai, which was 250 acres. After that we started Thane which was 350 acres. Now we are planning something which will be 5 times than this and at 25 times the pace in the next 5 years. So, the aspiration is maddening. But I do not have debt, so if it does not grow, I am not going to die. I will have to just slow it down. I do not have any debt on land barring a small amount for land in Chennai. So, there will be only working capital requirements. Market will really determine where we go. 

Which are these projects?

Under Hiranandani Communities, we have 2000 acres of land. In the ongoing projects, we have 580 acre project at Panvel, 380 acre at Chennai 250 acre project at Alibaug, 550 acre project at Khandala and 117 acre project in Pune.  In Alibaug resort township, we will also do five hotels besides water sports and jetti. It will be as big a township as Powai.

Since real estate is going through recession, can we expect further price correction in land prices?

Land prices are down, but I do not think it will go down further because government is increasing the prices. Government has paid four and five times of ready reckoner rates in rural areas.  For example, for the Mumbai-Nagpur express way, the government has paid five times ready reckoner value. Government is driving up the prices. Even on the urban side, the government is increasing ready reckoner rates when it is not required.

What is the point in talking about affordable housing, if land rates are consistently increased?

They are two different issues. Let us not mix them up.  Affordable housing is the mission of the prime minister and it is nothing to do with what the states do. He has single pointed mission that there should be housing for all by 2022. And he will do it. He will provide money to the states to build houses for the weakest of the people. Then private sector will be incentivised to do it too. Land price be whatever it is, he wants to achieve his objective.  He is very clear.

Can Mumbai really have affordable housing?

Mumbai is out of question for affordable housing. It will come out on peripheries, say Vasai, Virar, Boisar and ahead of Panvel. But the biggest advantage today is that the government is creating infrastructure to reach everywhere. In the next five to seven years, 170 kilometres of metro will come. There will be trans harbour bridge, coastal roads and Navi Mumbai airport. In the next five to seven years, Rs 1.7 trillion of investment will come in infrastructure. This is against Rs 650 billion invested in the last 65 years. The government is creating infrastructure to reach everywhere. Plus, there is upgradation of railway lines. The freight line between Panvel to Karjat is also getting converted into a passenger line. That will open as much land as whole of Mumbai, between Panvel and Karjat.  

So, you believe the state government will deliver on infrastructure projects?

Yes, of course. The government will deliver on infrastructure. For the first time, funds have been made available. About 70 per cent of this is coming from Japan International Cooperation Agency (JICA).