Ceear Realty, headquartered in Mumbai, made an entry into the real estate business in 2013 and has plans to develop Grade A projects in Mumbai, Pune and Bengaluru. The company was founded by Cherag Ramakrishnan, an expert in the real estate sector. Cherag, in an email interaction with Prashant C. Trikannad, talks about the prospects for the Indian construction and real estate sectors.
What is your short- to medium-term outlook on the Indian construction industry in general and the real estate sector in particular?
The Indian construction industry, in the short term, will continue to have a receivables challenge. But in the medium term, the order book should expand considerably, especially for the midsized construction players. The challenges of working capital due to high receivables will continue to dog the sector.
The realty sector looks set for a longer haul. In the short term, I see the sector continuing to battle slow revenue inflows versus a highly leveraged state of affairs. Whilst in the medium term, with a clear stability in place on the political front, I see a substantial pick up of revenues, which should not only help the midsized developers, but also show an increased interest in fresh commitments.
Alternate capital/private equity as it again comes in abundance should see a reduced cost/more risk taking ability with the developers.
This round of capital funding should show good returns for most capital providers.
What kind of impact has the new government had on the construction and real estate sectors?
Externally positive from a perception and sentiment point of view. How it translates over the coming few months remains to be seen.
Can you say which segments of the construction and real estate sectors look promising for new project opportunities?
The construction industry will see opportunities in the infrastructure space opening up dramatically in the coming few years as the investment cycles pick up. There should be a renewed interest in roads, water, sewage etc., with an overall order book growth imminent.
The real estate industry has a huge potential on the residential mid-market space, especially for the capital providers in the key cities and their extended areas.
The contrarian call is going to be in select retail/commercial developments which will see good multiples over the coming decade.
What are the key opportunities and challenges in the Indian real estate sector?
The real estate sector is an opportunity in principle. Within the sector, the key challenge lies in the cumbersome and unreliable approval process and number of NOCs. Our ability to simplify that will not only improve volumes, but help have a more steady price in the sector, which would benefit all stakeholders.
While the specific opportunities have been mentioned in the earlier question, there lies potential to create value as the expansion of existing cities/city, especially in Mumbai, Delhi, Bangalore and Chennai to some extent, continues to happen. Satellite cities like Pune have already benefitted with infrastructure to both Mumbai and the internal parts of Maharashtra improving.
How is the current real estate scenario in Tier-II cities? What kinds of projects are coming up there?
Tier-II cities have a niche market/velocity issue. The captive market due to the limited participation and local captive population can have only that much demand hence value opportunity. It was the IT boom or its potential to create jobs in these select cities that created euphoria but I believe with the larger cities offering better infrastructure and access to human population in the medium term it looks difficult. Their ability to absorb larger amounts of capital hence participation of national/regional developers is limited. Most projects here would be by local developers or at best regional players who have local brand equity, but smaller niche developments very opportunistically.
The opportunity really lies in the top 11-12 cities where migration to these cities is happening and hence long-term infrastructure and housing requirements. This is where the value lies in the medium to long term.
Could you briefly talk about Ceear realty and the projects, its total value and services it offers?
Ceear Realty, headquartered in Mumbai, made an entry into the real estate business in 2013. A young and professionally managed organisation, Ceear Realty will focus on projects spanning across asset categories. Under its present growth plans, it plans to develop Grade A projects in Bangalore, Pune and Mumbai.
A couple of Ceear Realty’s upcoming projects in Bangalore are ‘The Hamlet,’ a luxury residential project in Sadashiv Nagar and ‘The Big Tree,’ a multistoried residential development in Jayanagar. ‘Vesta Villas,’ an exclusive villa development at Alibaug, near Mumbai, is another project in its portfolio. Together these projects will throw a revenue of over Rs. 150 crore to Ceear Realty in the coming 12 months.
Ceear Realty runs functions on modern technological systems, contemporary management practices and employs a professional team with extensive functional experience across disciplines.
Ceear Realty has also offered development management services to landlords and large capital providers like PE funds. We strongly believe there is a gap for professionally managed and transparent development in the country which would give comfort to large and long-term capital to invest in the sector. We expect to bag at least one large project in Bangalore or Mumbai in the coming six to nine months.