Real estate growth depends on job security of people: Gera Developments MD

Tight monetary norms would mean funding will become harder for developers, he says

Gera Developments, a 50-year-old real estate firm that has completed 64 projects in Pune, Bangalore and Goa, will spend Rs 500 crore this year on acquiring land. “The biggest factor which might derail the entire growth momentum across all the segments in this sector (Indian real estate) is job insecurities,” said Rohit Gera, managing director of Gera Developments, in an interview with Pratigya Yadav.

Here are edited excerpts from the interview.

How many projects do you have in the pipeline this year?

We have two divisions - residential & commercial for sale and the other for lease. On the sale side, at present we have one commercial development project of about 800,000 square feet which encompasses 1200 small sized offices in Pune. For the residential segment, we have two projects in Pune which have about 2000 houses under development.

The company is planning to launch about 350 homes in the upcoming week, two other projects in Pune will add another 1600 homes and are currently under approval stage, will be launched by June.

By the end of this year, the company will have 5 million square feet of under development space in Pune and by next year, we are looking to expand to around 8 million square feet.

In Bengaluru, we have one commercial project for lease; we also plan to enter the residential market next year.

On the rental business side, at present, the company has developed about 750,000 square feet in Pune, slated to be ready by the end of this year. It has about 600,000 square feet under development and is expected to be completed in about two and a half years.

How is your business, especially the premium segment after the pandemic?

We would continue to focus on the premium residential segment. Up till 2021, the luxury segment was in a very bad situation across the country. However, premium and luxury segments post pandemic are doing well as affordability has gone up substantially.

The sector has been witnessing a shift in the market share towards more reputed developers. The overall market would see an increase of around 5-7 per cent this year, despite increase in interest rates as increase in salaries is more as compared to real estate rates increases over the last few years.

How do you see the US banking crisis and global layoffs shaping the Indian realty market?

Global uncertainties, including the banking crisis, have shown that the Indian approach of being conservative has paid off. However, with tightened monetary norms, funding will get harder for the developers (and) which would make strong developers even stronger.

The biggest factor which might derail the entire growth momentum across all the segments in this sector is job insecurities. It would reduce the discretionary spending of customers and if those insecurities continue it would impact the demand in the realty market. However, as of now, layoffs have not impacted India as job securities continue.

Do you plan to enter the north Indian market?

The company has its key presence in the south Indian market, especially in Pune, Bengaluru and Goa. At present, we have no such plans to expand in other regions. We currently are focused to deliver in the existing markets instead of spreading in diverse markets. We are ambitious and certainly want to grow but not at the cost of stakeholders, customer’s trust and experience.

In both the markets of Pune and Bengaluru, we have partnered with market leaders including K Raheja Corp and Prestige group. Our goal is to continue the partnership route and build scale and will continue to enhance our capabilities on the build to sell side and partner with the best people for build to lease side.

Do you plan more child-centric homes in cities?

Yes, child-centric homes are performing really well and we will expand. But at present, we are not looking for other cities. By the end of 2023, the company will have around 4000 under-development child-centric homes and will deliver about 2000 homes.

Business of child-centric homes starts where the business of real estate ends. Our focus is on the after-market as well.

We have also tied up with celebrities such as Anil Kumble, Rohit Sharma, Mahesh Bhupathi, Pullela Gopichand, Bhaichung Bhutia and Shankar Mahadevan to set up learning academies within the child-centric housing societies.

What are your investment plans this year?

We have already committed two land acquisitions of around Rs 500 crore in Pune and Goa, and we are planning to add another parcel of land worth Rs 500 crore, making a total investment of Rs 1000 crore by the end of this year.