Shravan Gupta, 35, executive vice-chairman & MD, MGF Emaar Group, is among the few entrepreneurs who have pushed their family business into hitherto uncharted territories. He was barely 20 when he set up an automobile distribution division with the likes of Hyundai, Toyota and Volvo. His next big leap came in 1996, when he steered the family business into real estate and became the first group to diversify into the retail sector. The group now is toying with the idea of tapping the stock market, but only if the situation improves. In an exclusive interview with Raja Awasthi, Mr Gupta speaks about the real estate industry and his group's future plans. Excerpts:
Given the weak global sentiment and lacklustre demand, do you think real estate prices will soften more in the near future?
The real estate sector is an emerging industry in the country and has witnessed some sharp changes in the past few months due to upheavals in the macro economic dynamics. But despite double-digit inflation and imminent liquidity crunch, the fundamentals of the business remain relatively optimistic. For the realty sector in particular, the pent-up demand is significant and actual end-users have substituted the waning speculative interest in the sector. Though there is a perception that the real estate sector in general is witnessing a short cooling-off period, we believe it is a correction in some submarkets. Today, within the global macro economic context, India still remains an attractive investment destination. With most emerging and major markets experiencing a downslide, India stands to provide greater returns on investment.
With stock markets on a roller-coaster ride, do you have any plan to tap the capital market?
We will revisit the equity markets when sentiments improve and there is a sustained phase of consolidation.
Has raising funds become difficult for real estate companies?
One of the challenges that developers are facing today is liquidity crunch due to stemming of fund flows and rising input costs. However, we are a well capitalised company with a strong brand and a long-term vision for the real estate sector in India. While the current situation can be trying for companies that were aiming for quick, short-term returns, for more established players, this is only a part of the business cycle.
The investment scenario is not bright at the moment. Will we see more PE deals in the given scenario?
Yes; considering the overall economic scenario at present, many developers including EmaarMGF will look at PE funds for further funding requirements.
Many real estate groups have already forayed into hospitality, financial services, retail and telecom. Do you plan to diversify further?
As one of the country's leading real estate developers, we are already present across four key business segments — residential, retail, commercial, IT and hospitality, in addition to education, healthcare and infrastructure sectors. We have an extensive pipeline of projects spread over 26 cities and our current focus is to consolidate and streamline our project rollout plans, emphasising on efficient delivery and customer satisfaction.
Your take on the potential of Indian retail market?
Retail is one of the key economic engines of growth in the country. While the sector has been experiencing a heady growth over the last few years, the current global meltdown and runaway crude prices have dampened the overall economic environment. This has had an impact on retail real estate with rentals coming down and stemming/ reining of project plans in the short term.
However, India's retail sector is evolving at a swift pace due to rapidly changing lifestyles and consumer aspirations of an ever-burgeoning middle class. The total retail mall stock has been doubling every year, from a meagre one million square feet in 2002 to a staggering 40 million sq ft by end of 2007, and an estimated 60 million square feet by the end of 2008. It is estimated that the number of operational malls to grow more than double to over 412 with 205 million sq ft by 2010, and further 715 malls by 2015, on the back of major retail developments spread across tier II and tier III cities in India. We foresee sustained growth in this sector over the next few years.
raja.awasthi@timesgroup.com
Given the weak global sentiment and lacklustre demand, do you think real estate prices will soften more in the near future?
The real estate sector is an emerging industry in the country and has witnessed some sharp changes in the past few months due to upheavals in the macro economic dynamics. But despite double-digit inflation and imminent liquidity crunch, the fundamentals of the business remain relatively optimistic. For the realty sector in particular, the pent-up demand is significant and actual end-users have substituted the waning speculative interest in the sector. Though there is a perception that the real estate sector in general is witnessing a short cooling-off period, we believe it is a correction in some submarkets. Today, within the global macro economic context, India still remains an attractive investment destination. With most emerging and major markets experiencing a downslide, India stands to provide greater returns on investment.
With stock markets on a roller-coaster ride, do you have any plan to tap the capital market?
We will revisit the equity markets when sentiments improve and there is a sustained phase of consolidation.
Has raising funds become difficult for real estate companies?
One of the challenges that developers are facing today is liquidity crunch due to stemming of fund flows and rising input costs. However, we are a well capitalised company with a strong brand and a long-term vision for the real estate sector in India. While the current situation can be trying for companies that were aiming for quick, short-term returns, for more established players, this is only a part of the business cycle.
The investment scenario is not bright at the moment. Will we see more PE deals in the given scenario?
Yes; considering the overall economic scenario at present, many developers including EmaarMGF will look at PE funds for further funding requirements.
Many real estate groups have already forayed into hospitality, financial services, retail and telecom. Do you plan to diversify further?
As one of the country's leading real estate developers, we are already present across four key business segments — residential, retail, commercial, IT and hospitality, in addition to education, healthcare and infrastructure sectors. We have an extensive pipeline of projects spread over 26 cities and our current focus is to consolidate and streamline our project rollout plans, emphasising on efficient delivery and customer satisfaction.
Your take on the potential of Indian retail market?
Retail is one of the key economic engines of growth in the country. While the sector has been experiencing a heady growth over the last few years, the current global meltdown and runaway crude prices have dampened the overall economic environment. This has had an impact on retail real estate with rentals coming down and stemming/ reining of project plans in the short term.
However, India's retail sector is evolving at a swift pace due to rapidly changing lifestyles and consumer aspirations of an ever-burgeoning middle class. The total retail mall stock has been doubling every year, from a meagre one million square feet in 2002 to a staggering 40 million sq ft by end of 2007, and an estimated 60 million square feet by the end of 2008. It is estimated that the number of operational malls to grow more than double to over 412 with 205 million sq ft by 2010, and further 715 malls by 2015, on the back of major retail developments spread across tier II and tier III cities in India. We foresee sustained growth in this sector over the next few years.
raja.awasthi@timesgroup.com
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