Max Estates, a subsidiary of Max Ventures and Industries Ltd (MaxVIL), has so far deployed equity worth about Rs 2,000 crore, and has funded the acquisition of four projects – one residential and one commercial project -- in Noida and Gurugram, respectively, MaxVIL MD and CEO Sahil Vachani told Moneycontrol in a video interview.
“We have fully acquired these four projects by equity. We raised the money by exiting our packaging business last year. Our partnership with New York Life brought in more equity, and a rights issue in 2018 also contributed,” he said.
In November 2021, MaxVIL sold its 51 percent stake in the specialty packaging films business to Toppan Printing for an "enterprise value of Rs 1,350 crore, translating into an equity value of about Rs 600-650 crore”.
“We are very confident that the Rs 2,000 crore equity we've invested will take Max Estates to the next trajectory and we would become one of the top real-estate developers in the region,” he said.
The company’s total investment is about Rs 3,300-3,400 crore across both the residential and commercial segments.
Max Estates has already delivered three commercial projects and one residential project over the last three years. “Now, we are looking to scale up in a more significant way. Over the last year, we have announced four new acquisitions or projects - a residential project in Noida, a residential project in Gurugram, a commercial project in Noida, and another commercial project in Gurugram,” he said.
The company is working on two new commercial projects. In Noida, it has recently acquired a 4-acre land parcel through an auction, and, in Gurugram, it bought a 7-acre land parcel. “Both are commercial land parcels on which we will be doing approximately 2.8 million sq ft of office and retail development,” he said.
This format is in partnership with New York Life Insurance. “They are our partners. We are their exclusive partner for India. This is a platform approach, under which they will hold 49 percent equity and Max Estates 51 percent in every project we partner with them. That's the format for the office space,” he said.
As for the residential space, the company has acquired a land parcel in Sector 128, Noida, spread across 10 acres, on an outright basis.
It has also signed up a joint development in Gurugram for 12 acres and “both of these are about 3.5 million sq ft. The total investment of Max Estates will be about Rs 3,300 crore across these four projects over the next 3-4 years.”
The company has acquired these four projects in the last eight months. The launch of the residential project is likely in the first half of this calendar year. The Gurugram residential launch will happen early in the calendar year 2024.
“We have already started work on our office projects as they are built to lease. Hopefully, in 3-4 years, they will come to market for leasing,” he said.
Noida fast catching up with Gurugram in terms of office space
Asked if A-grade office space rents in Noida are fast catching up with those in Gurugram, Vachani said that the UP government’s push is not only on infrastructure but also on crime reduction over the last 7-8 years.
The infra push has significantly helped Noida emerge as a stronger office destination.
“So, we have companies like Yes Bank, Cyril Amarchand Mangaldas, Khaitan and Co, Microsoft and many others which have taken up office space in Noida. We believe this trend is going to continue. In fact, at some points last year, we have seen that of almost the total commercial space take-up in NCR, Noida’s share is about 40-45 percent. Noida’s share of total office space takes up in NCR at about 40-45 percent. So, we are very confident that Noida will continue to grow as an office market. The infrastructure supports it.”
The company’s commercial development along the Noida-Greater Noida Expressway, Max Square, actually costs sub-dollar per square foot a month, which is the thumb rule for most office developments across India.
“So, we believe, it's a great value-for-money proposition for occupiers. We believe it's in line with the trends where large corporates want their employees to work well, to work in a more productive environment, to be more collaborative, and, therefore, these developments augur well to the needs of most global and Indian forward-looking occupiers,” he told Moneycontrol.
The company started at about Rs 95 per sq ft in 2019 and the last rental close was Rs 140 per sq ft.
He said the company is bullish on the overall Noida story and of rental growth in times to come.
He said the upcoming Jewar airport will further fuel demand for commercial projects in Noida. “And we're very hopeful that it will come up in the promised timeline. And from what one hears, it is moving forward really, really well. So, yes, we believe it is going to have a huge positive impetus in the overall market,” he said.
On the Bar Council of India's recent decision to permit foreign law firms to operate from the country, he said, at Max Towers, “many of our occupiers are law firms. And they're the type of clients that prefer good quality office spaces -- safe, secure, and truly want to provide their employees with what we call the work-well experience. So we're very confident that moving forward, office demand will continue to hold up.”
Impact of Silicon Valley Bank collapse
Asked if the Silicon Valley Bank collapse in the US is likely to have any impact on commercial rentals in India, Vachani said that the Indian banking system continues to be very strong.
He hopes that the interest rates would correct soon, ensuring continued demand growth.
“The balance sheets of most banks are strong. They have taken prudent capital decisions, and, therefore, we hope that there will not be a significant impact on the Indian real-estate space. We do hope that, in times to come, interest rates will move downwards at some point in time to enable further consumption. So far, the increased interest rates have not had an impact on the residential demand but we are hoping that it does correct in times to come to enable continued demand growth.”
UP must come up with a policy for stuck projects
Max Estates has said that the National Company Law Tribunal (NCLT) has approved its bid to acquire a stalled, mixed-use project 'Delhi One' in Noida through the insolvency process, a development that will bring relief to nearly 300 stuck customers.
The company bid for the project in 2019 and its bid was approved by the NCLT last month. “It took four years to get NCLT approval. We are still a little while away,” he said.
He suggested that the Uttar Pradesh government should come out with a policy that will provide relief to thousands of property buyers stuck in various stalled projects.
“We, as an industry body, have requested the government to formulate a policy to be able to resolve the distressed or stuck projects, and we're very hopeful that the government will consider this industry-wide demand and look at forming a policy for the resolution of these projects. So, while we do have NCLT approval, we are waiting for a policy to be in place by the UP government to be able to move this forward,” he said.
Max Estates was set up in 2016. Its first project was 222 Rajpur, a premier residential community comprising 22 villas in Dehradun. It has also developed three commercial projects -- Max Towers and Max Square in Noida, and Max House in Delhi. For the development of commercial projects which are capital-intensive, the company has tied up with New York Life Insurance Company as an equity partner at the project level.
New York Life Insurance has so far committed Rs 800 crore in Max Estates commercial projects. New York Life Insurance also has around 23 percent stake in MaxVIL, which is listed on stock exchanges. Recently, New York Life Insurance Company announced an investment of Rs 290 crore to acquire a 49 percent stake in Max Estates' upcoming commercial project in Gurugram.
