Mahindra Lifespace has entered into a joint venture (JV) with HDFC Capital Affordable Real Estate Fund.
Discussing the contours of the JV and business outlook going forward, Anita Arjundas, MD & CEO, Mahindra Lifespace said the intent of JV is to do affordable housing together. Initially, they would focus on the Mumbai and Pune market and then later move to other markets.
The company already has a affordable housing brand named ‘Happinest’ that was launched in 2014 and have already delivered 1000 homes and sold over 1400 homes under this, said Arjundas in an interview to CNBC-TV18. Total size is of 2000 homes.
The intent of the JV is to extend the footprint of affordable housing across the country. Together both entities would put in Rs 500 crore for the project, which would mainly go towards land and the pre-approval costs. The equity split is 51 percent Mahindra Lifespaces and 49 percent HDFC Capital.
Other expenses would get funded through internal accruals and debt, said Arjundas.
Currently, the contribution of affordable housing is around 7-8 percent of total revenues but as we do more projects, margins would go to 20-25 percent, said Arjundas. The company currently have two affordable housing projects.
The two pilots under affordable housing have given them an understanding on what kind of locations, cost structures work, marketing along with the ability to complete projects in short time line, she said.
The third project will be with the new JV at Palghar, she said. Happinest have homes between Rs 10 and Rs 25 lakh segment. However, the understanding between the JV partners is that there is an ability to do homes upto Rs 50 lakh based on location. Margins would range between 15 and 20 percent range for affordable house as opposed to conventional margins of 20-30 percent range, said Arjundas.
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