Rise in GDP, higher disposable incomes contributing to real estate market's growth
Luxury real estate development company Sunteck Realty is focused on maintaining a strong balance sheet and cash flows while continuing to make marquee acquisitions in line with the business development strategy, Kamal Khetan, chairman and managing director of the company told Sangeetha G in an interview. According to him, continuing rise in GDP per person, higher disposable incomes, accelerating urbanization, and, most significantly, a greater global focus on India as the next major economic power are contributing to the Indian real estate market's continued long-term growth.
How has been the recovery in the luxury real estate segment post RERA, demonetisation and pandemic?
The luxury real estate market has experienced a resurgence in the last two years post pandemic. With the rise of work from home culture, people are increasingly investing in luxurious homes with spacious layouts, top-notch amenities and facilities for a better quality of life. It is encouraging to note that the real estate sector has experienced rapid growth by demonstrating resilience and adaptation, and is well-positioned for expansion because of the government's policies and the rising demand for luxury residences.
The growth of the luxury real estate sector in India over the past two years has been influenced by the Real Estate Regulation and Development Act (RERA), Demonetisation, and Pandemic. RERA has made the real estate market more transparent and regulated, which has increased trust among investors and buyers because it upholds accountability. This has also increased confidence among the HNIs who invest in luxury real estate market.
How do you see the sales and supply in the real estate sector with the interest rates going up?
The Indian domestic real estate market made astounding progress in 2022, setting new sales marks of 68% YoY, highlighting the industry's prominence as one of the nation's fastest-growing sectors. Festive spending has encouraged the Indian real estate industry to keep up its strong pace and experience steady sales growth. The housing market is currently showing a long-term upward trend. Residential property demand is presently rising as homebuyers' confidence in the market increases. A continuing rise in GDP per person, higher disposable incomes, accelerating urbanization, and, most significantly, a greater global focus on India as the next major economic power are all contributing to the Indian real estate market's continued long-term growth.
How are interest rates and inflation going to affect the luxury segment? How has been the interest of NRIs in real estate in recent times?
Today, NRIs are investing in the luxury housing market because it supports their way of life and offers a secure haven through higher rates of appreciation and longer-term rentals. According to recent data, the average monthly rent in India's top seven real estate markets and well-known premium micro-markets has increased by 8–18% over the past two years. The top two cities that attract NRIs who continue to invest in upscale real estate are Mumbai and Gurugram. Furthermore, a number of laws that the Indian government has implemented are intended to make it easier for NRIs to invest in real estate, which has increased interest in the market.
Overall, a number of variables, such as monetary circumstances, governmental regulations, and world events, are likely to have an impact on NRIs' interest in the Indian real estate market.
Tell us something about the company's voyage during the past few years.
In the past few years, Sunteck has been growing its projects across micro-markets within MMR at a fast pace. Since the advent of COVID-19 first wave, the company has acquired 25.5 million square feet of projects across the western and eastern suburbs of MMR. These projects have a total development value of close to Rs 20,000 cr with residential segment contributing 80-85% and the balance 15-20% would be coming from commercial and retail segment.
Our focus on cash flow management has enabled us to generate close to Rs 830 cr of operating cash flow surplus in less than 3 years. The strong cash flow has led to negligible debt in the company, with Net Debt to Equity standing strong at 0.14 x.
Another focus area for the company has been generation of annuity income. On this front as well, Sunteck has leased out approx. 2 lakh square feet of built-up area of its premium commercial building Sunteck BKC 51 located at Bandra Kurla Complex Junction to Upgrad Education Private Limited for a lease term of 29 years. The total revenue generated from the project will amount close to Rs 2,000 crore over the entire lease tenure.
How has been your growth in recent times and what are your expectations in the near future?
We are riding high on bullish sentiments in the market. In addition to a rise in the use of technology to improve the client experience, we anticipate a rise in the demand for effective and ecologically friendly properties. Our business is in a strong position to benefit from these trends because of its diverse portfolio of properties and customer-focused culture. We are committed to giving our stakeholders exceptional value and are enthusiastic about the possibilities that lie ahead.
Additionally, the luxury home market in India is expanding. In the past several years, there has been a steady increase in demand for luxury residences in India. Essentially, there is a growing need for opulent residences with cutting-edge amenities and conveniences as a result of rising disposable incomes and increasing desires among the Indian upper income bracket.
The pandemic strengthened people's desire to own a luxury home, and it has been strong ever since. India's luxury real estate market is expanding at an exponential rate. Home buyers no longer equate luxury homes with only splendour; instead, it now conveys a sophisticated aesthetic characterised by unparalleled experiences, upscale facilities and services.
Tell us about your new projects?
We have recently launched luxurious residences Sunteck Sky Park in Mira Road, Mumbai. Boasting an impressive range of amenities and a prime location, this project is poised to redefine the concept of modern living. Sunteck Sky Park is spread across 7.25 acres and will consist of proposed 45 storeys, offering 2 and 3 BHK apartments. The project boasts of state-of-the-art amenities.
Since the advent of COVID-19 pandemic first wave, the company has acquired marquee projects at growing micro-markets such as Vasai West, Mira Road and Borivali West in Western Suburbs of MMR and Kalyan in the Eastern Suburbs of MMR. We have successfully launched residential projects at Vasai West in Q1FY23 and Mira Road in Q4FY23. Going forward, we intend to launch Kalyan. All these projects are large land parcels with significant development potential. Thus, there will new launches in these projects at regular intervals. Over and above, there will be new launch in our already established projects at Sunteck City, ODC Goregaon West and Sunteck World, Naigaon.
Where do you see yourself a few years down the line?
Maintaining the growth and success of Sunteck Realty while fostering the industry's long-term viability is our aim for the future. As a responsible brand, we are committed to giving our clients outstanding value while keeping the highest standards of business accountability and societal responsibility. The ultimate objective is to always be true to luxury and be known for our dedication to quality, reliability, and customer satisfaction.
We look towards improving our operational efficiencies that have a lasting impact, and continue to focus on our long-term growth strategy based on Sunteck 3.0 our guiding principles: firstly, maintaining a strong balance sheet and cash flows; secondly, continuing to make marquee acquisitions in line with our business development strategy; and lastly, building an exceptional team.
