Worst over for real estate: Godrej

MUMBAI Adi Godrej, chairman, Godrej Industries, says capital availability has improved dramatically for real estate companies.

Are you now seen more as a developer? What is the outlook on JVs?
Godrej: We have done several JVs...also with other developers when they face difficulties in financing or completing projects. Our model is clearly doing JVs with land owners; we think it's an excellent model. We do acquire land from time to time but we are very clear that when we do so, it should be a small percentage of the project cost. So, clearly, we are not interested in acquiring land in South Delhi or South Bombay or such areas.

You think the worst has passed for realty?
Godrej: I think it is consistently improving, and it's quite possible the situation would be much better three months down the road than it is now. Residential demand is improving dramatically all over the country. Commercial demand has not improved, and it will depend on how IT and BPO do in India.

Has access to capital largely increased for the industry or perhaps for Godrej Properties?
Godrej: I think so.Look at all the QIPs that have been put together; the appetite for Indian paper has increased. Clearly, capital availability has improved dramatically.

Do you think high margins are sustainable?
Godrej: What is important is the profit in each project. Clearly, profit margins would decline a little bit in the future because in the past, most real estate companies had some amount of profit margin coming in from appreciation in value. To us, profit margin is not important; absolute profit is important, and growth in profit is important.

By arrangement with UTVi business news