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Prestige Estates will have debt for CapEx projects, not for residential projects: Irfan Razack, CMD
Irfan Razack, Chairman and Managing Director, Prestige Estates Projects Ltd., during an interview with Zee Business, spoke about the supply-demand condition in the real-estate sector, company’s plans and debt levels among others.
Irfan Razack, Chairman and Managing Director, Prestige Estates Projects Ltd., during an interview with Deepali Rana, Zee Business, spoke about the supply-demand condition in the real-estate sector, company’s plans and debt levels among others. Edited Excerpts:
Q: Throw light on a demand-supply scenario in the real-estate space? Also, provide your outlook for 2019?
A: On-ground situation is good, and the last two quarters has been a reasonable one. I feel the demand will go up in 2019. The affordable housings for the mid-income group have been performing and the demand in luxury segment will go up in the recent future.
Supply has been a good one and there is a continuous and steady growth in supply, but the prices haven’t changed in accordance to the growth and have seen a change of plus/minus 5-10 per cent over the last six months. There is no supply-demand mismatch and a time when the customer has opportunities to get a good house at best rates.
Q: During our last meet, you provided an outlook of Rs3500-4000 crore for FY19. Do you still stand with the projections?
A: Yes, the outlook remains intact. We have achieved our targets in three quarters and will achieve the targets/guidance in the fourth quarter too. Possibly, we may surpass the target.
Q: Tell us about the ongoing projects and new projects that are in pipeline and will be launched in the recent future?
A: Prestige Estates, in the first week of January 2019, has celebrated completion of six projects – 2 official and 4 residential projects – over 6-million square feet. We will start new projects but will also complete the old projects. In fact, we, our company, has a strategy for completing the existing projects and handling them to the customers. This helps in boosting the confidence of the customers.
Besides, several projects are in pipelines like in Hyderabad, Chennai and Bangalore. Soon, a new project will be launched in Goa, but it will be launched after the project is approved from RERA and get a registration number for it. New projects should be RERA-compliant, and it gets approved only after the complete document is submitted with the authority. Launches are delayed due to the process but benefits by ending the doubts that customers have on the projects. I feel, RERA has turned up to be a levelling factor and can also bring stability in the market.
Q: Sir, let us know about the kind of contribution, percentage wise, that the commercial property business has in your total revenue? Also, provide your outlook on commercial business including the launch of new ventures?
A: Commercial business is steady, and rentals have gone up and the vacancy level stands around zero in the space. There is a great demand in commercial IT and office spaces, but a shortage of supply has helped in increasing the rentals. We have a target to reach a rental income of Rs2000 crore by 2020 and this will be achieved by completing the construction work of all commercial projects, both IT and offices. In addition, we have also launched two projects of 2.2-million square feet in Bangalore and 1-million square feet of official commercial space in Chennai, in the recent past. We have also tied-up in Hyderabad for 2-million square feet for commercial IT space.
Lot of work is being done in commercial spaces where the demand is steady, and continuance of the demand will add up to the rental income of the company. At times, we will be selling part commercial, retaining part of it, this sale will add up to revenues and the top line of the company. And, this addition to the top line will help in increasing the bottom line.
Q: Any update on the debt level of the company?
A: In the capital assets business, the debt levels stand around 60-65 per cent while business with rental incomes like malls, offices and IT spaces are self-liquidating debt. The remaining debt is associated with the residential projects and was incurred to grow the business or the last-minute construction completion finance that is taken to complete the projects and sell it off. The commercial receipts collections will help in meeting those. Thus, debt levels are comfortable and easy. We have synthesized that residential projects should be sold at a pace with right collections so that there should not be any cash flow mismatch. This endeavour will help in reducing the debt levels and we are trying to do so. We hope that at a point of time the company will have debt for CapEx projects, not for the residential projects.
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