Despite COVID-19, Sunteck Realty to invest Rs 2,500 crore in three Mumbai projects over next 36 months

The company has a footprint equal to about 38 mn sq. ft and hopes to launch close to 2.5 to 3 mn sq. ft this year; has entered into three major acquisitions during the pandemic period


For some real estate developers, COVID-19 is set to unearth new opportunities.

Sunteck Realty is a case in point. The company entered into three major acquisitions during the pandemic, striking hard bargains and now plans to invest close to Rs 2,500 crore into three projects located in Vasai (around 50 acres), Vasind (around 50 acres) and Borivali (around seven acres). The estimated time of the investment is also three years.

In a chat with Vandana Ramnani, chairman and managing director of Sunteck Realty, Kamal Khetan, 53, an avid art collector and a fitness enthusiast, talks about the company’s investment plans, going forward. He is confident that the company’s balance sheet will only be strengthened, and the realty firm will benefit from the consolidation wave as several bargain deals are available.

He is also of the belief that the second wave may push buyers to prepone their home buying decision, but it will also compel them to return to the market faster.

The company has a footprint equal to about 38 mn sq. ft and hopes to launch close to 2.5 to 3 mn sq. ft this year.

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Sunteck Realty clocked sales revenue of Rs 608 crore in FY 20 and pre-sales of Rs 1,221 crore in the same year. The last quarter of 2020 was especially good. With the real estate sector currently feeling the heat from COVID-19 second wave, where are things headed?

When the first wave of COVID-19 hit the country, buyers were clueless but were quick to realise the importance of having a roof over their heads, especially after being confined to their homes due to work-from-home. The pandemic, therefore acted as a catalyst. I think we will see a similar trend this time around too. There may be restrictions on peoples’ mobility for some months but once they are lifted, the first thing they will look out for would be homes. Having said that, there is still some uncertainty regarding the commercial and the retail segment, but housing will continue to reap benefits.

Have you launched any new projects during the pandemic?

We launched a tower in Suntec City, Oshiwara District Centre (ODC), Goregaon West and managed healthy sales. We saw 77 percent year-on-year (YoY) growth in the pre-sales under the mid-income segment category.

Are your plans for this fiscal on track or will they be deferred on account of the second wave?

I don’t think the supply pipeline will be impacted too much. The supply chain may face some hiccups, but I think organized players are efficient enough to handle these issues. Last year, what we spent on construction was far higher than pre-COVID levels. To ensure that we don’t face similar surprises this year, we have decided to set aside more money than last year to ensure that projects get delivered on time.

The amount spent on construction before COVID-19 was over Rs 500 crore and the amount we finally spent post the first wave, was Rs 400 crore (80 percent of pre-COVID despite lockdown). This fiscal we have set aside Rs 500 to Rs 600 crore for the purpose and in the coming couple of years, it should grow by 20 to 25 percent annually.

To what extent has construction work been impacted on site after the second wave?

Only about 15 percent to 20 percent labourers have left for their villages this time around. They would have in any case gone home during Holi and there has always been a shortage of labour during that month. I will say that this COVID wave came at the same time. Last year after the first wave, as many as 80 percent of the labour had returned to their villages.

Having said that, there are certainly some issues with regard to the supply chain getting impacted, but we are prepared to handle that challenge.

Has the movement of cement, steel and the raw materials been impacted?

That has not happened yet as the government has allowed construction work during the lockdown, provided labourers are available on site. Last time during the first lockdown everything was shut completely. So that way, things are much better this time. I think this will only drive more housing sales in the future as an increasing number of  people are compelled to prepone their home buying decision due to the lockdown and restrictions on movement; they would take faster decisions once everything opens up.

Tell us about the three project acquisitions that you made in Vasai, Vasind and Borivali last year? What are your plans for this fiscal year?

Obviously, we are looking to launch at least two out of the three projects in the current financial year. Sunteck Realty has strong collections and cash flows, which is only expected to increase going forward. That will also make us one of the biggest beneficiaries in the consolidation game.

We are confident about all the three new locations – Vasai (around 50 acres), Vasind (around 50 acres) and Borivali (around seven acres). These are all in the joint development model. We will be spending close to Rs 2,500 crore constructing projects in these sites. They have a potential like our other three big engines - BKC (Bandra Kurla Complex), ODC and Naigaon. There are many more projects too. Sunteck Realty will continue to acquire during this consolidation period, and I think we will be one of the biggest beneficiaries of COVID-19. We completed the highest number of acquisitions during the first wave too, last year.

Will the new acquisitions be in the affordable or the mid segment? Also, would these necessarily be adjoining a commercial complex?

The new acquisitions will be spread across all the segments – uber luxury, premium luxury (mid-segment), aspirational luxury (affordable) although more focused on new locations.

We go to a location that is unexplored, and which has not achieved its full potential. The Bandra Kurla Complex was famous only as a commercial destination. No one wanted to be in BKC for residential purposes, and no one thought that it could be a luxury residential destination. Sunteck Realty saw the potential in the area and took the risk by investing heavily in a residential project there and it obviously made a difference.

Similarly, we went to ODC at a time when no one wanted to go there. Coincidentally that too was a mini-CBD (central business district) area, but the location’s residential potential was untapped. Therefore, our strategy all along has been to maximise the potential of a location. We don't go anywhere or everywhere where land is available. Our investment is backed by research. We do our homework before we get into a location.

Are you planning to expand outside the Mumbai Metropolitan Area (MMR)?

MMR is the most resilient market in the country and is akin to Manhattan in the US. After the first wave of COVID-19, the bestselling market was the MMR market. And I think there are several opportunities here. We would want to be a strong player in one market rather than spread our wings across too many markets. The biggest advantage is that we have spread our risk by being in every segment. We have a real estate product in all segments, ranging from Rs 3,000 per sq. ft to Rs 1.25 lakh per sq. ft. We love this market and we know it well. Besides, since there are several opportunities in this market, we do not need to look beyond the MMR market.
Vandana Ramnani
first published: Jun 2, 2021 01:16 pm

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