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It is a good, bad and ugly situation in real estate, says Niranjan Hiranandani


There is a K-shaped recovery in real estate. Segments of real estate are booming. Bangalore is booming, some of the suburbs of Mumbai are booming, Thane is booming, Navi Mumbai is booming. But a lot of projects which were stuck earlier, especially in the NCR region, certain areas of the peripheral of Mumbai region — are still not taking off for lack of funds, for lack of permission and even from lack of even workers, says Niranjan Hiranandani, Co-founder & MD, Hiranandani Group of Companies.


Now taller and bigger towers can be built closer to the coastline. What will this mean for the property market in Mumbai?
The good news is that the jhopadpattis and the redevelopment buildings which were stuck because they could not use the higher FSI for the purposes of redevelopment of slums and old and dilapidated buildings will now be permitted in the CRZ area and the redevelopment of the coastal belt can take place. I think this is a very good thing. We were waiting for it for seven years and I am glad that finally this has happened.

Number two, this is for Mumbai city and suburbs. We expect that in another 15 days we should be able to get it for the purposes of Thane and the other peripheral areas also. Plus, there is the issue of flamingos. A final notification is to come where the distance of 10 kilometres is to be brought down to 3.5 kilometres. This affects the entire Thane and the central suburbs. So it is not just one thing which needs to be corrected; a lot more will come but that is expected in the near future.

Are we going to see coastal rules in Goa, Alibag as well as Odisha?
The problem of the coastal zone management plans was pending for quite some time both with both the state and the centre. The good news is Mumbai city and suburbs is cleared but Thane and the peripheral areas like Raigarh are still to be cleared. I do not know about Odisha. But I do know that those zone plans were also pending but they are not so urgent. Here in the case of Mumbai, it is terrible because slumps are in a bad shape and buildings are crumbling.

How are things on the ground? Would you say that the situation is much better than it has been in the past few months?
I am going to use an economic term called the K-shaped recovery. Segments of real estate are booming. Bangalore is booming, some of the suburbs of Mumbai are booming, Thane is booming, Navi Mumbai is booming. But a lot of projects which were stuck earlier, especially in the NCR region, certain areas of the peripheral of Mumbai region where some projects had been stuck, those projects are still not taking off for lack of funds, for lack of permission from RERA, from lack of even workers because they have not paid the workers. So we have a K-shaped recovery in real estate.

It is a good, bad and ugly situation. certain projects are doing fantastic. Even the listed companies; Godrej, Tatas, DLF are doing well, private companies are doing very well in segments but there are also some companies not doing well; Omkar, which was a redevelopment entity, is doing very badly. So I would say fantastic news in terms of environmental clearance which is good for the industry and good for the people in dilapidated buildings.

Are developers going to be a little cautious in terms of the buildings that they currently make?
It takes a long time to get building approvals done in case of slums. So do not expect everything is going to be supplied in a hurry. But it is a good start and over a period of time, these things are going to have a positive impact. Every step that you take in that direction is good, the lower rate of interest which is there is fantastic. In the recent past, Kotak reduced it, State Bank reduced it, Bank of Baroda reduced it. So interest rates are the lowest in my whole lifetime. I have never seen such low rates of interest in case of home loans. This is happening, certain states want to further increase stamp duty rates in the future. That is going to be another expectation.

Positive news in terms of all these things happening and development is taking place but K-shaped recovery means not all companies are doing very well. Even on the commercial side, there are companies which have done fantastically in the last quarter including our company. We are going to see a good amount of commercial development which has disappeared. The work from home prevented companies from taking new commercial space but now the good news is many people are taking commercial space. It is good news in Bangalore, good news in MMR and good news in parts of NCR.

I was talking to a developer from the private space in NCR. He said life has never been so good. I have done business worth Rs 6,000 crore in the last five months. You have pretty much built Navi Mumbai too?
We are doing very well. Residential has gone up by almost 50% and we are doubling the quantum of commercial projects. We sold a billion dollars worth of 4.2 million sq ft to Brookfield three years ago. We are going to add six million sq ft in the next one year or so. We are quite bullish. We have also diversified. My son has taken leadership in the data centre space in the warehousing space along with Blackstone and also the energy space which my son again heads in terms of gas and pipelines and terminals and the floating LNG terminal.

Interest rates being at all time low, builders are doing really well you. As the festive season begins with navratri, what is the expectation many of you have to outdo each other? Are we going to start seeing a price war as everybody competes in this comeback?
Demand is pretty high. I do not think there is so much a price war. I see a price increase with the raw material prices going up. Competition being what it is, there is not too much worry. Demand has hugely increased.



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