Gautam Ahuja, Managing Director, Ahuja Constructions

Yash Ved, IIFL | Mumbai | January 01, 2015 11:25 IST

"Given the space constraints in Mumbai, the opening up of FDI will bring in opportunities for equity capital for smaller projects (in terms of built-up area and capital requirement) within the city as well as in other markets. Relaxation of FDI limit in real estate development under the automatic route is a clear road map for inviting investments."

Gautam Ahuja, Managing Director, Ahuja Constructions has recently completely the Owner/ President Management Program (OPM-42) from Harvard Business School.Gautam Ahuja started his first venture at the age of 19 realizing the business potential of the dotcom industry and usage of internet. Taking over as the managing director of the company in 2006, he has been involved in the entire spectrum of business activities.
 
Ahuja Constructions has developed 43 projects amounting to 2.53 million sqft and around 2,760 units spanning the belts of Bandra to Borivali, Chembur to Mulund and Navi Mumbai. Going forward, the projects that are in the offering in various locations of Mumbai Metropolitan Region like Charni Road, Worli, Bandra, Khar, Oshiwara, Malad and Ambernath, total up to approximately 3.07 million sq.ft translating to an additional 4850 units. The company’s diverse portfolio of projects encompasses Greenfield Society Redevelopment, Joint Venture as well as SRA developments, catering to the Super Luxury, Luxury and MIG segments.
 
Replying to Yash Ved of IIFL, Gautam Ahuja says "Given the space constraints in Mumbai, the opening up of FDI will bring in opportunities for equity capital for smaller projects (in terms of built-up area and capital requirement) within the city as well as in other markets. Relaxation of FDI limit in real estate development under the automatic route is a clear road map for inviting investments."
 
Will FDI bring any advantage to the Mumbai real estate market?
Given the space constraints in Mumbai, the opening up of FDI will bring in opportunities for equity capital for smaller projects (in terms of built-up area and capital requirement) within the city as well as in other markets, improving quality and delivery of low cost and affordable housing projects. Relaxation of FDI limit in real estate development under the automatic route is a clear road map for inviting investments.
 
The real estate sector in India has unanimously welcomed the government’s decision to revise the foreign direct investment (FDI) norms in the realty sector. The government has announced the minimum built-up area requirement to be relaxed from 50,000 sqmtr to 20,000 sqmtr to allow FDI. This implies that the foreign funds would flow more easily, which in turn would facilitate quality and timely completion of projects, especially for redevelopment projects and Greenfield projects in island city. The minimum capital investment by foreign companies has been revised to $5 million from $10 million.
 
What is your total area under development?
Till date, we have developed 44 projects amounting to nearly 4 million sqft, spanning the belts of Bandra to Borivali, Chembur to Mulund and Navi Mumbai.
 
Going forward, the projects that are in the offering in various location of Mumbai Metropolitan Region like Worli, Bandra, Oshiwara, Sion, Lokhandwala (ext.), Malad and Ambarnath, total upto approximately 5 million sqft. This would be further augmented to ensure a pipeline of 10million sqft at any given point in time. Our diverse portfolio of projects encompasses Greenfield, Society Redevelopment, Joint Venture as well as SRA developments, catering to the Super Luxury, Luxury and MIG segments.
 
What is your take on real estate prices?
The real estate prices depend upon the micro-market dynamics which includes supply and demand, existing and upcoming infrastructure and the segment/ category of the projects. In majority of the location, the prices will keep moving upward, but with different rate.
 
However instead of a major change there would be a nominal one, which would differ from segment to segment. Having said that, within the same segment, different properties will witness a differential price increase on account of product offering. For example, projects with better design, location, amenities, and technologies will always find preference and have a premium pricing within the segment.
 
Segment and product offering are important factors in deciding the price of the micro-markets.
 
Give us your outlook for the real estate sector?
Real estate sector contributes to 6% in the total GDP and also is the second largest employment sector in India. More  than 200 industry are closely related to real estate, like cement, bricks, sanitary, wood, to name a few. The real estate sector in India assumed greater prominence with the liberalization of the economy, as the consequent increase in business opportunities and labour migration led to rising demand for commercial and housing space.
 
At present, the real estate and construction sectors are playing a crucial role in the overall development of India’s core infrastructure. The real estate industry’s growth is linked to developments in the retail, hospitality and entertainment (hotels, resorts, cinema theatres) industries, economic services (hospitals, schools) and information technology (IT)-enabled services (like call centres) etc and vice versa.
 
Residential real estate industry has witnessed stupendous growth in the past few years owing to a number of reasons like continuous growth in population, migration towards urban areas, ample job opportunities in service sectors, growing income levels, rise in nuclear families and easy availability of finance from home buyers.
 
Comment about the launch of ‘Vrindavan’, integrated township?
Vrindavan is the new phase of Prasadam, our integrated township at Ambarnath (E). Sprawling over 50 acres, it is aimed at promoting the concept of community living. It lies equidistant between Ambarnath and Badlapur railway stations and just a few minutes walk from the upcoming Chikhloli railway station. Connectivity to this gated community is excellent, by road as well as by rail from KDMC locations and Mumbai. The attractiveness of this project is further enhanced by the recently announced measures to improve connectivity like the Chikhloli Railway Station and 4 new roads in Ambarnath. In its honeycomb inspired layout, the residences have been built in a circular manner, around a spectacular landscaped garden and cater to the varying needs of buyers, offering 1, 2 and 3 BHK apartments.
 
Prasadam is well equipped with modern amenities and bequeaths the buyers with a reason to rejoice with a number of exceptional facilities like a school, nursing home, supermarket, art corner, boundary plantation, and shopping plaza, Cineplex, banquet hall and even a temple. The key highlight of the project are a plethora of amenities designed to exuberate and help amass the feel of complete and refined living.
 
Are you in talks with PE for projects?
We already have tie-ups with Private Equity firms for our ongoing projects,
  • Prasadam – Motilal Oswal
  • Ahuja Towers – Apollo Global Management, LLC, ICICI Bank & ICICI Venture
  • L’Amor – ICICI Bank
 

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