The real estate market in Goa continues to be robust with huge demand for housing from non-residents as well as locals. The commercial property market is similarly thriving due to companies looking to set up offices and shopping arcades. It is attracting outside builders to the state who see a great potential in venturing into unexploited markets. Pune-based Gera Developers Pvt Ltd is stepping up its presence in Goa with three completed projects (in Patto and Caranzalem) and two ongoing commercial projects. Here, ROHIT GERA, managing director talks to SHOMA PATNAIK on issues relating to his company’s plans for the Goa market, coping with village panchayat antagonism, demand for retail space
You have launched two projects within a year. Are you expanding more in Goa than in other cities?
Goa has and will continue to be a focus area for Gera. We ventured into the real estate business here in 2005 and have completed three projects with two new commercial projects currently under development. We are looking to expand our presence in the state and hope to provide local residents with world class amenities that will benefit not only the users but the surrounding social and environmental ecosystems as well. We believe in being “in Goa for Goa” and therefore have utilized local resources and man power to help the economy. Our projects are developed to reduce the burden on the state infrastructure in terms of water consumption, parking, electricity, etc. In terms of quantum of share of our project portfolio, Goa has a limited potential as demand is not as much as Pune or Bangalore. Therefore, while we are in Goa for the long term we do not envisage the scale of operations here being larger than in our other markets.
Goa is rapidly getting urbanized. Does it affect its USP to outsiders looking to invest in real estate?
Most cities in India are seeing rapid urbanization. However, urbanization happens because people move to cities for jobs and this puts pressure on civic infrastructure. Goa is different since the pressure of urbanization is not there to any large scale. The strength of Goa is the road infrastructure which continues to be upgraded on a continuous basis. The quality road network makes it easier for people to live outside the cities and yet travel to the city for work with ease. This quality road network when combined with robust public transport tremendously reduces pressure on the cities.
All your projects including the two ongoing are in urban areas. Do you prefer to work in prime city localities?
Our strategy for commercial buildings is to build best-in-class for the office segment. Commercial buildings generally end up being developed in the business districts and these are typically in urban centers. Four of our projects are commercial and as such developed in the urban centres. The residential project completed is also in Panaji. However, we are currently working on a project that is not urban centric. We will provide homes that are in a more affordable segment both in terms of size and price for the Goan customer.
Gera’s only project, a non-city area in Marcel, is facing hurdles. What is the status of the Marcel project?
We have no regrets about our decision to develop a project in Marcel. Goa has a reputation of opposition to real estate projects in the non-urban areas. However, given land costs in the urban centres the cost of homes is often unaffordable for the masses. Therefore, one needs to look at land that is non-urban to bring homes that can be afforded by the masses. Unfortunately, some people look at development with a NIMBY (not in my back yard) outlook. This is unfortunate. We follow green building norms. The project requires approvals from the Environment Ministry. We are therefore confident that as and when we get the requisite approvals and develop the project, the residents will realize that we are not here to impact them negatively. In fact for Marcel, we have leased nearly three acres of land to build a public community park and playgrounds for the residents of Marcel and nearby villages.
The high cost of housing is preventing Goans from buying homes. Who are your clientele in all your projects?
Gera’s Astoria, a residential complex, is bought by nearly 90 per cent Goans. Similarly, the businesses housed in both Gera’s Imperiums at Patto are mostly Goan. Our aim with our Marcel project is to create homes at more affordable prices for Goans.
Rate the ease of doing business in Goa compared to other places where you have presence?
Every jurisdiction has its challenges. We have found that certain departments are actually proactive. At the same time, we were forced to appeal to the Chief Minister and the High Court to get justice for obtaining approvals for our project at Mala as there was an embargo on approving plans of commercial buildings. The experience was excellent and once we got the orders from the court the process was smooth.
Gera’s latest project – Imperium Grand in Patto – is on Parsvanath land where the builder had plans of developing a mall. How suitable do you think Patto is for a mall and did the thought of developing the property as a mall occur to you?
We do not believe Panaji has the capacity for a large mall. There needs to be adequate density and this is not there. Also, developing malls is not our core competence and as such we do not believe in developing projects beyond our areas of competence.
The years 2013 and 2014 were financially challenging to construction companies because of cost increases and demand slowdown. What is the outlook for 2014-15?
2013-14 was far better to us in terms of sales on account of new projects, including the project announced in Bangalore. We believe in a conservative fiscal policy. As such, we have very low levels of debt. As a result, we do not get adversely affected due to high levels of debt in adverse times. Our outlook for 14-15 is positive. We believe the economy has bottomed out and we will certainly see many home buyers firming up their buying decision.
Budget 2014-15: What are its implications for the real estate industry?
The budget, given the constraints faced by the Finance Minister, is extremely positive for many sectors. The government has shown its focus and concern for urban development by addressing the areas of urban renewal and smart cities. With regard to real estate, there are several measures that are positive. For the home buyer, the increase in the deduction of interest paid for self-occupied homes from Rs 1.5 lakh to Rs 2 lakh is of help to the home buyer. At a capital mobilization level, the reduction of the limits for FDI in terms of size of projects and minimum capitalization requirements will help generate additional funds for realty projects. In addition, the introduction of REITs provides access to the capital markets for income generating real estate thereby creating a new class of financial asset as well as providing an exit structure for investors investing in the development of these assets. Increased tax exemption limit will lead to big savings for income tax payers this could encourage additional investments in the housing sector. By proposing schemes for development of airports in Tier II and Tier III cities, the FM is giving impetus to infrastructure development. This will further boost the realty sector as good infrastructure, better connectivity will provide stimulus for people to migrate from the Tier 1 cities to Tier 2 and Tier 3 cities.
How much of green initiatives have you incorporated in your housing project in Caranzalem?
Gera’s Astoria was designed and built as environment-friendly resort styled residences. The project has a sewage treatment plant and treated water is reused in the project. This reduces the pressure on the city’s infrastructure. Also, the recycling of water reduces the demand for water. The project uses solar energy for heating water. We also have used low energy lamps for the common areas. The designs and balcony placements are done so as to provide maximum shading to the windows so as to reduce the heat gain into the homes. The landscaped terrace acts as a green roof to reduce the heat gain from the top floor.
The ‘assured return scheme’ by builders; does it improve demand? You are one of the companies with the scheme in Goa.
The assured return schemes are attractive for those who plan to not use the home for a year or those looking at buying as an investor for returns from the project. We believed there was a demand for homes on rent at Astoria, Caranzalem and when we were asked by customers to assure them of the same, we responded to the customer requirements and provided the assured rental scheme.