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When local real estate players go national
Gargi Gupta | December 23, 2006
South City Projects, a consortium of some of Kolkata's largest realtors, recently bagged two projects in Dubai. One, a 1,50,000 sq ft office building inside the Dubai Investment Park, and the other, a residential project of around 150-200 studio apartments.
The total investment for the two projects will amount to Rs 100 crore (Rs 1 billion). Although Pradeep Sureka, one of the South City partners, makes light of the Dubai project, describing it as "entry level", South City's Dubai foray is an indication of the growing ambitions of city promoters.
Sureka has also bought a 10-acre plot in Bhubaneswar, where he plans to come up with a high-end residential complex. His Sureka Group has also acquired three plots measuring 64.5 acres in Hyderabad, one of which will be developed into an IT work space, while the other two will be residential projects. Besides, Sureka has also tied-up with a partner for a project in Siliguri.
Then there's Bengal Shrachi Housing Development which is not only building a 257-acre township in Burdwan and a mall in Durgapur, but is also constructing a premium housing complex, Neo City, on a 15-acre plot, in Bhubaneswar.
Rahul Todi, managing director, says he is on the lookout for land in other major towns of eastern India like Ranchi, Patna and Guwahati for similar projects.
PS Group, which has several large-format housing and commercial projects in the city to its credit, has not confined itself to the east.
Pradip Chopra, director, says the company, along with another city developer, Srijan Group, is building a 3,50,000 sq ft mall in Chennai, another huge 9,50,000 destination mall in Coimbatore, two middle-end housing projects in Chennai besides a 250-acre service sector SEZ in Pune and another 75 acres of space near Chandigarh.
The southern city is also where Piyush Bhagat of Bengal Silver Spring Projects is coming up with a Rs 400-crore (Rs 4 billion) IT park spread over 1,35,000 sq ft.
Bengal Ambuja is coming up with two townships in Punjab, a housing estate in Raipur and an IT park in Nagpur. Other outstation projects by Kolkata builders are the Mani Group's 4,00,000 sq ft mall in Raipur and Merlin Projects' foray in Raipur.
Clearly, Kolkata builders, whetted by their local successes - especially in several large-format residential and IT office developments in Rajarhat, want to keep up the growth momentum. Says Chopra, "There's been a close to thousand per cent growth in turnover in the past three years."
There's the clutter in the real-estate market, but then, as Sureka points out it's the same everywhere in the country. What's changed is perhaps the number of outstation players who have entered the city real-estate space - DLF is coming up with a 5,000 acres integrated township in Dankuni; Unitech, another Delhi developer, is coming up with a 100-acre premium residential project, a logistics centre and an IT park in and about Rajarhat, while Shappoorji Pallonji from Mumbai is going to build a low- and middle-end housing estate spread over 150 acres.
Not just that, there's also overseas interest in the form of Indonesia's Salim and Ciputra group, which have bagged some large projects in the state - the 5,000-acre Calcutta West International City, and a slew of SEZs and industrial parks.
Thus, Sureka's point, that "While Kolkata remains our forte, it makes sense not to put all the eggs in one basket", makes sense.
Then there is the relatively easy access to credit that is also propelling Kolkata realtors to bid for projects elsewhere.
The PS Group will need a capital flow of around Rs 500 crore (Rs 5 billion) for its various projects in the next two years - Rs 225 crore (Rs 2.25 billion) for the Coimbatore mall, Rs 80 crore (Rs 800 million) for the mall in Chennai, around that much each for the two residential estates, Rs 150 crore (Rs 1.5 billion) for the Chandigarh SEZ and another Rs 250 crore (Rs 2.5 billion) for the one in Pune.
Chopra says that he's not only talking to banks but has been approached by a number of venture capitalists, including some foreign ones.
But it seems Bengal's restrictive land ceiling norms, the strictures on land-use conversion in the state leading to a high prices of whatever land that is on offer are the main reasons why local realtors are looking for greener pastures in other parts of the country. "Tamil Nadu does not have an urban land-ceiling and there are no restrictions on conversion of land use.
"Maharashtra too has a special township act wherein land-ceiling is not applicable for land measuring more than 100 acre," explains Chopra. Concurs Sureka, adding that, "In contrast, getting land in and around Kolkata is still very difficult.""It's natural. Now that they've come up with several large projects here, they naturally want to increase their footprint in other cities. It is also a sign of the growing maturity of the city's real-estate industry," says Todi.