 "Pirojsha Godrej")
When most developers are holding back on new ventures, Godrej Properties has launched Godrej Oasis in Gurgaon, its fourth such in two months. Pirojsha Godrej, managing director and chief executive officer, tells Mansi Taneja why the company is unfazed. Edited excerpts:
The real estate market is going through a phase of declining sales and very few launches. Developers and buyers are in a wait-and-watch mode. What made you launch your project at this time?
We can have successful launches in even tough times. This is our fourth new project in a fourth city in two months. We' ve got a good response; for Godrej Oasis (the latest) we already have positive traction. Such tough cycles always happen in real estate. We only wait for the right approvals and launch within weeks of getting all these, irrespective of market conditions.
Unlike other developers, Godrej follows a profit sharing arrangement with landowners, rather than buying land. What is the strategy behind this and how successful has it been?
Most developers in and outside India face a difficulty in proper cash flow management. Given the volatile nature of this business, it is difficult to manage in such market conditions, where many are holding back launches. If you have bought that land, the interest meter is always ticking. With our joint venture model, we can do more projects with the same amount of capital. Growth prospects are much higher and from a risk mitigation point, we can diversify investments into a larger number of projects. We are assured of higher returns, though we share profits with the land partner. Our model facilitates larger growth, than locking up capital and buying land.
With this model, Godrej should then be looking at launching more low-cost projects. Yours are mostly mid- or high-end.
We've done some affordable projects in Ahmedabad. The problem with launching these is in the number of clearances and approvals, which are challenging and increase the project cost. Affordable projects are feasible but it is hard to see it fully scalable at the moment. Being a low-margin business, it becomes difficult to generate big volumes with all these difficulties. But we are open to doing projects in all price brackets and we have homes from Rs 20 lakh to Rs 20 crore.
Any plans for retirement homes for senior citizens?
We have done a little research and are exploring the space. But we want to scale our operations in the residential space. This is an interesting opportunity; we might look at it.
You are a late entrant in the National Capital Region, one of the largest in India's property segment. What are your expansion plans there and for other markets?
Yes, we were a late entrant but we now have three projects in Gurgaon. We will launch a high-rise residential project in Okhla, Delhi, next year. We are also looking at Noida and hope to announce a project there as well in this financial year. We don't want to enter any new city at the moment. Our focus is to scale our operations in the 12 cities where we are present. We have marked our entry in all major real estate markets across India and will keep adding projects in the same cities.
Five years down the line, do you see yourself as the number one real estate firm?
We started as a very small developer about seven to eight years ago. Today, by many measurements, we are already in the top five. We want to continue that growth trajectory. And, with our brand name, we are able to attract customers and joint venture partners. We aspire to be number one and we think we will achieve that.
