While several real estate players are struggling due to demand slump, Godrej Properties believes it has managed to buck the trend. Pirojsha Godrej, managing director and CEO of the Godrej group’s realty arm, said many developers have seen good sales and subdued residential market will be buoyant again in a year. “While the demand environment is subdued throughout the country, I don’t think there is any case with absolutely no demand at all. For the right projects and developers, there continues to be good demand. However, for a more full-fledged recovery, confidence still needs to improve and that will happen over the next six to 12 months. I think in a year from now the industry will be in a much better position,” said Godrej, adding that their recent launches in Byculla and Badlapur have seen good demand and the new project ‘The Trees’ at Vikhroli has created a lot of excitement.
Spread over 34 acre, The Trees is Godrej’s first mixed-use development in Mumbai while also being its largest in the city. It has a mix of commercial (9.4 acre), private luxury residential (6.7 acre) and, residential, retail and hospitality space (9.2 acre). The first phase of the development will have 374 residential units of carpet area ranging between 480 and 1,334 square feet and penthouses between 2,043 and 2,465 square feet. The pricing ranges from Rs 1.7 crore all inclusive price for a 1BHK unit to Rs 8 crore for a penthouse.
On pricing of the project, Godrej said, “Our sense is that the pricing is very fair. It’s not that pricing is low but neither is the cost of doing such a development very low. Here, we are talking about creating a truly world-class environment and hopefully the project will give our customers a sense of the quality of development we want to build,” he said. In terms of revenues expected from the development, Godrej said, “We see a revenue potential of over $1 billion (Rs 6,600 core) from this mixed-use development that will be completed in phases over the next five to six years.”
While the residential towers will be the first ones to come up, the company will simultaneously work on the second commercial tower. The high street retail park and five-star luxury hotel is still work-in-progress. “We are seeing a lot of interest from all the major luxury operators for this hotel project,” said Anubhav Gupta, executive vice-president and chief design officer, Godrej Properties. While Godrej group chairman Adi Godrej had in a recent conversation told dna that the company would eventually sell their commercial properties even if they were leased initially, it is still not clear if the same will apply to the five-star luxury hotel asset that will come up in the mixed-use development. “We have not really decided about it yet,” said Pirojsha Godrej.
On the real estate market, Godrej said, “I don’t think there will be a major price crash over medium term. However, in the short term, anything is possible. One needs to understand that the cost side of the basket for developers has also increased in the last few years. If prices crash, any new project developers won’t make any money.” “Next question will be, why would the developers do a new project then? If they don’t have a choice but to take a haircut they will make some losses and finish the development. So no one is going to bring new projects to market to book losses. “I think we saw a similar thing play out in the commercial real estate space over the last five to six years because there was too much supply in the market. But now things are starting to change because there is no fresh supply and demand has continued absorbing most of what was there, and will now present a situation where demand is now in excess of supply.”