Joining the likes of DLF and Unitech, Bangalore-based realty developer Puravankara Projects today announced its foray into the affordable housing segment in an effort to beat the property sector slump.
Puravankara, which has a land bank of 125 million sq ft, said fully-owned subsidiary Provident Housing and Infrastructure will launch the projects.
Jayakar Jerome, a former bureaucrat, has been appointed as the managing director of the new company, while Puravankara's current Chairman Ravi Puravankara has joined the company in his current capacity.
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The realtor will launch the projects in two phases. In the first phase, the company will develop projects in Bangalore, Chennai, Hyderabad, Coimbatore and Mysore with an investment of Rs 8,000 crore. It will build 64,500 homes with a total built-up area of 59.80 million sq ft in the next five years.
The apartments are priced at Rs 10 lakh, Rs 15 lakh and Rs 20 lakh respectively for one, two and three bedroom houses. Two and three bedroom houses will range from 750 sq ft to 1,100 sq ft and one BHK (bedroom, hall, kitchen) homes will be smaller in size.
The company currently sells two bedroom apartments between Rs 40 lakh and Rs 50 lakh and three bedroom houses between Rs 50 lakh and Rs 60 Lakh in Bangalore, depending on the locality.
Property majors such as DLF and Unitech have already forayed into affordable housing after the slowdown hit the property market in the last nine months or so. Of the total Rs 8,000 crore, Puravankara will spend Rs 1,500 crore towards land acquisition and Rs 6,500 crore towards construction, said Ravi Ramu, director, Puravankara.
The land acquisition will be financed from internal accruals and pre-sales from the project and other half of the land cost will be raised from private equity companies. Construction financing will also be done through internal accruals, pre-sales and bank debt, he said.
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Puravankara is also making a foray into hospitality. The realtor will develop five to six hotels, mostly in the five-star segment, said Ashish Puravankara, the director of Puravankara Projects.
The company will invest Rs 1,000 crore in the venture in the next five years. The company is also talking to a number of hospitality majors to run these hotels. However, it refused to name the firms.
"We have the necessary land in the South for the projects. Depending on the viability, we will set up hotels there,'' he said.
"We are open to all types of funding options. Though the cost of funds have gone up, it has not impacted us much due to our healthy financials. We posted a net profit margin of 42 per cent in the first quarter of this financial year and the highest rate at which we raised debt is 14 per cent,'' said Ramu.
In the second phase, the company will cover cities such as Delhi, Kolkata, Kochi, Jaipur, Pune and Nagpur.
The company will develop the first three projects in Bangalore and Mysore, comprising over 19,000 houses and covering an area of 17.10 million sq ft. The Bangalore project will be launched in the next 2-3 months, said Jayakar Jerome, the managing director of Provident Housing.
