Rreef is on the threshold of transforming the real estate and infrastructure scene in India in coming years. Kishore Gotety tells Dilip S. Phansalkar how the projects will contribute to India's economy and social change.

Rising building material prices are adding to construction costs. What impact will it have on Rreef's affordable housing schemes for middle-class in India?
The rising costs impact affordability and have an adverse impact on developers' margins to the extent they are unable to pass on such cost increases to the consumer. More importantly, inflation affects sentiment and in the short run, deters potential buyers from closing transactions. Consequently, buyers start looking at value more closely and turn more towards an 'affordable' product and away from the 'luxurious.'
Our partner in affordable housing development, Golden Gate, has significant advantages in this segment. It has a value-for-money product that's very well designed and comes with all modern amenities. Further, the company has a highly experienced in-house construction team that helps keep construction costs under control. Secondly, it has consistently demonstrated success and ability in identifying and acquiring low cost land, thereby maintaining their edge in the affordable housing sector.
If the trend continues what options are developers and consumers left with? How will they cope with it?
The rising costs will be split between the developer and the consumer. The proportion of the split will depend on the product type, the price range and the demand supply economics. In an inflationary environment, developers will have to run a tight ship in order to keep costs and timelines under control. When prices rise, revenues or sales also have a tendency to slow down. Maintaining smooth sales curve will thus be critical, too.
Customers will get selective and more than ever before will critically evaluate the value proposition of every competing product before buying.
What avenues are open for an investment firm to raise funds for its real estate projects?
Private equity flows continue to remain strong in the country. Long term players such as Rreef continue to look for projects and thus viable development opportunities will always find its investors. REITs and REMFs will be another source in the medium term.
Encroachment by slum dwellers (who enjoy protection of local corporators, slum lords and politicians) around housing projects is common in India. What steps are being taken to prevent it from happening to Rreef projects?
Encroachment is an issue on unguarded, unfenced and disputed lands. This is usually not a threat for land owners enjoying complete ownership and possession of property.
How critical is the location and infrastructure for the success of a residential or commercial project?
Extremely critical. Easy road accessibility, adequate power and water supply, availability of public transportation and so on are important considerations that both, residential and commercial users look out for. In addition, residential customers want to see the presence of an established social infrastructure such as schools, hospitals, convenience shopping and entertainment in the vicinity before they commit to a property.
The inflation rate is climbing and has reached an all-time high in the past two-and-a-half years. How are you going to handle it when it comes to setting up real estate projects?
Inflation has an impact on project costs and also on affordability for the end-user. The focus will thus be on value offerings. Our ability to offer moderately priced homes and commercial spaces will be critical in going forward and we will continue to partner with strong local developers towards this endeavour.
It is often said that in India files move at a slow pace and corruption is common. How do you maneuver or overcome such problems?
This is a sweeping statement. The Government has actively encouraged foreign investment in all sectors and ensured speedier approval processes, wherever possible.
What is the step-by-step procedure for foreign firms who wish to set up projects in India? (E.g. dealing with local government and civic agencies, getting clearances, approvals etc.)
The guidelines for foreign investment depend on the sector, type of investment, etc. There are clear policies laid out in this regard and it is best to consult a local lawyer for a step-by-step explanation.
What improvements would you like to see in India's rural and urban infrastructure?
Better connectivity through improvements in transportation infrastructure (primarily road and air) is critical. There is also a need to ensure higher power generation and water supply across the country. This will prove critical as cities expand and new 'cities-within- cities' develop.
What site tests do you carry out to evaluate its suitability for putting up a project?
We conduct a thorough site analysis and environmental due diligence on the land to check for any contamination on the site. This is especially important when the land had been put to an alternate use in the past.
How would Rreef projects contribute to India's economic boom, industrial progress and social change?
We are expecting to invest about $1 billion over the next three years in Indian real estate and infrastructure. We believe these projects will actively generate ample direct and indirect employment opportunities.
We are hoping that through our projects, we provide homes to aspiring families and efficient and high quality work places for professionals. We are keenly looking at investing in integrated township projects that aim to provide a good lifestyle to their residents through improved social infrastructure, amenities for education and healthcare, walk-to-work offices and so on.
We are also active investors in greenfield infrastructure projects and are evaluating investments in roads, power, ports, etc. Through development of these projects, we are hoping to contribute towards the improvement of infrastructure in the country.