“Real Estate industry to have maximum incremental HR requirement” – Ashok Mohanani, CMD, EKTA World
The deadline for project registrations with Mahrashtra’s RERA is today – July 31, 2017. There has been a scrambling among the developers to not miss this deadline. So far, Maharashtra is ahead of other states for the implementation of RERA. All stake holders are waiting to see RERA implemented smoothly and bring in more transparency in the Real Estate industry. We have been interviewing the real estate developers and other real estate industry stake holders over various aspects of the industry. Recently, Team Estrade discussed RERA and other matters concerning the industry during a discussion with Ashok Mohanani, CMD, EKTA World. Following are the excerpts of this interaction.
About Ashok Mohanani
The Chairman & Managing Director of EKTA world and a lawyer by qualification set up EKTA group in 1987 with modest projects, which has grown in leaps and bounds to be a firm today with a turnover of 500 crores. Famed for its thoughtful planning, marvellous architecture and excellent execution, the group’s success stories include Lake Homes, EKTA meadows, EKTA terraces, Lake Superior, EKTA Empress, Ecstasy I & II, & Eminente.
He is currently on the Managing Committee as the Vice President of NAREDCO WEST – Maharashtra (National Real Estate Development Council). NAREDCO is a real estate development body under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India.He continues to be an active member of Lions’ Club International and have been a part of the organization for the last 15 years; currently the District Chairperson for the Rural Development portfolio. Apart from this, I am the trustee and founder member of Sharddha Rehabilitation Centre that works towards the upliftment of road side destitute, schizophrenics etc.
- Tell us about Ekta World? How you started and built this brand? Also tell us, about your products and services?
The inception of EKTA group dates back to the year 1987. Since then the company has grown from strength to strength, the group has built choicest residential complexes in the western suburbs between Bandra & Dahisar in Mumbai, the up market NIBM road at Pune and a global residential township near the heritage site of Pandav Leni at Nashik. With every new project the group has consciously worked towards being more and more environmentally responsible. Quality is perhaps the most widely used terms, but EKTA world lets its standards do the talking. Famed for its thoughtful planning, marvellous architecture and excellent execution, the group’s success stories include Lake Homes, EKTA meadows, EKTA terraces, Lake Superior, EKTA Empress, Ecstasy I & II, &Eminent, EKTA Greenville, Nashik, EKTA California, Pune. These are few of the landmark residences the group has built over the years.
- What is your geographical range? Which cities/towns have you already successfully built projects? What is the size of the market you are currently competing in?
EKTA world is present in the Nashik, Pune, Virar and Mumbai. We are strongly present in the western suburbs from Bandra to Dahisar, Dadar, Chembur. We are currently developing appx 1 million Sq. Ft on an annual basis.
- What are your views on RERA (Real Estate Regulatory Authority)? For developers having projects across India, will it increase the cost for permissions and RERA registrations as each state has its own RERA?
The RERA implementation is sure to bring in the much needed transparency; also, governance and Industry status to affordable housing are all a boost to the sector. It is advantageous not only for the buyers but also for the developers, thus smoothing the field between both the players. By improving the industry’s reliability, this welcome reform has a scope of appealing more investment sources into the affordable housing segment and will help in obtaining finance at reduced costs and encourage foreign direct investment. The government is also actively working on the one window clearances for permission and expediting processes for clearances, since this is of paramount importance for developers to meet their possession dates timely.
- What in your view are the major implications of RERA, for developers and buyers, both in positive and negative terms?
RERA is a ground breaking and revolutionary legislation; it is consumer centric and has taking into account every aspect of development. There is absolutely nothing negative attached to the law, in the initial stages what the developers are experiencing are just the teething issues and these are short lived. With time, this legislation will ease out transactions in the industry and restore faith of the buyers. This act will wipe away all fly by night operators, thus the real estate market will be left with brands and legacies to fulfil customer’s home/residential requirements. The Law has brought even the Real estate agents into the ambit of the law, i.e. every channel partner will need to be registered with RERA and obtain a RERA unique number and developers too are supposed to align themselves with only these bona fide channel partners.
- Do you have presence in the Affordable Housing segment? It is being promoted in a big way, however, do you feel Affordable housing is commercially successful?
Ekta World caters to the affordable housing segment thought its Project Ekta Parksville in Virar, Mumbai. This housing segment has over the years gained traction and keeping in line with “housing for all 2022”, our Honourable Prime Minister’s vision. In current times real estate players are taking considerable efforts to cater to these income groups by coming out with a gamut of mass housing projects. Moreover developers will be able to make inexpensive housing more commercially viable, by making the funding available at a considerably low interest rate as opposed to the extensive borrowing rate prevailing in the market.
- What is your marketing strategy? For each product segment.
Marketing Strategy adopted for various projects does differ substantially depending on the product, price, location and positioning that has been envisaged for the project. The Brand positioning of the company is also of paramount importance. It is important that customers are aware of the legacy of the company and have a top of the mind recall whilst being in their buying cycles and research modes.
- With the launch of RERA, the pre-launch segment has any possible future remaining?
With the implementation of RERA, pre-launch of a project has effectively been wiped off, because prior to any sale of unit it is imperative that the developer gets registered under RERA. And for the registration the developer need approved plans and permission etc. all in place. However, with this the consumers can now make informed decisions with regard to the purchase.
- What is the major hurdle for the development of India’s Real Estate industry? What positive steps would you suggest for all stake holders of the industry?
The real estate sector, although is the second largest employment generating sector, has been burdened with hitches like large unsold inventories, high property rates and regulatory glitches. This is the major hurdle in the smooth functioning of the Indian real estate industry. The government’s aim of building 100 smart cities will lend a helping hand in easing the relocation burden on tier-I cities, thus accommodating the mounting quantum of fluctuating population with suitable amenities. Robust infrastructure framework and sound development are also positive steps that go hand in hand in boosting the economy.
- How do you think realty firms would benefit from government’s flagship projects such as ‘Housing for All by 2022’ and ‘100 Smart Cities’?
The projects like ‘Housing For All’ by 2022 and “100 Smart Cities” announced by our Prime Minister, PMAY etc., are positively altering the entire zone of real estate in India. The greatest profit for the realty segment will be in terms of the total sq. ft. area of the construction which will have to be created, to bring into reality the idea of ‘Housing for All’. The proposed 100 smart cities that will be constructed, will demand a gamut of infrastructure work by the private real estate sector. Hence the prospective home buyers and private realty companies will momentously benefit from such development schemes.
- What are the implications of GST on your on-going and future projects? Are there any changes you expect in the government’s GST policy for your industry?
Implementing GST is a Landmark move by the government to simplify taxation in the Indian economy. Undoubtedly, GST will be a milestone for Indian industries, considering that it will subsume majority of the taxes levied consolidated tax structure. Additionally, the amalgamated tax system will curb multiple taxation practices at state and center level, which hurt consumer with their inflated price points. GST is enforcing transparent transactions and minimizing unscrupulous trades across all realms and bringing all genres under its ambit. For real estate the GST has been fixed at 12% after giving 1/3rd deduction for deemed value of land. For projects in their nascent and early stages of Construction GST will be particularly fruitful since the benefit derived from the input credit can be passed on to the Consumers, initiating lower total outlays. The exact benefit will differ from location to location and from the type of development such as Luxury or affordable housing.
- How is changing technology impacting Real Estate? The basic components and drivers of this industry have more or less been the same over many years. You think that realty companies would find innovative ways of using new technologies such as Big Data, Complex machines and AI?
The wave of digitalization has already positively impacted all the realms, similarly has enormously stimulated the real estate sector. The various advancements in technology has given rise to execution of various revolutionary methodologies in the realty domain, giving an increased demand for smart homes imbibed with futuristic technologies, smart homes and building management systems.
- Which product segment is the highest revenue earner for your company? Which has been the biggest project in revenue terms for Ekta World? Biggest project in terms of size? Also, the smallest project in terms of revenue?
Over the last three decades, EKTA world has done projects of all genres; stand alone, complexes, residential townships in various regions like Pune, Nashik, Mumbai & Virar catering to various socio economic strata. We have actively pursued all kinds of business models as well, like redevelopment projects in western suburbs of Khar, Bandra, Santacruz and in Dadar & Chembur and hav undertaken projects on an outright and development management model. Our project at Lake Homes, Powai is panning across 2.2 million sq ft. and EKTA parksville, virar our ongoing project is appx 1.5 million sq ft. with all the state of the art amenities.
- Do you see property prices coming down? If no, why not? If yes, how and when?
The real estate scenario has seen a lot of changes in the last 3 quarters and with the implementation of RERA and GST there have significantly impacted the fraternity. Developers have initiated their compliance process toward RERA, migration to GST etc. has been on the forefront, and hence the sales figures have been a fairly tepid. There would be a relative change in price points on account of GST, since developers will be passing on the benefit of the input credit to the consumers. However the extent will be subject to the kind of development and stage of construction.
- In the next two years, what are the two trends that will define the future of the industry?
In the coming years, trends like integrated structures like mixed-use buildings that will comprise commercial, shared accommodations, mass housing and residential space and co-working space will definitely be trending the real estate market. And affordable housing is surely going to be on top priority.
- What type of projects are getting funding these days? REIT and FDI, which one of the two will dominate the market for Real Estate and Infra projects over next 2 years? Bank funding for developers to fund projects is set to ease?
Between 2000 and 2013, the sector attracted $40,399 million as foreign direct investment. It is expected to attract FDI of $180 billion by 2020. The sector grew at a CAGR of 9.42 per cent between 2003-04 and 2012-13. Capital investments in the sector are anticipated to rise from $651 billion in 2012-13 to $1181 billion in 2019-20. With further stream lining and transparency infused in to the functioning of the sector, it will positively attract fund flows, giving a much needed relief to the sector.
- Is the Real Estate industry facing a shortage of skilled workforce? The industry doesn’t seem have made a concerted effort in this regard in comparison to other industries, such as wellness, manufacturing, IT, etc. Your comments?
India will need around 76.5 million strong work force in its booming building, construction and real estate sector. This sector will have the maximum incremental human resource requirement from 2013-2022. The construction sector is the largest contributor to central exchequer and second largest employer in the country. It creates more than appx 45 million jobs either directly or indirectly among various classes of individuals in the country. So the imminent need is to expand the reach of training providers, set up models and institutes with the capability to scale. There are many schemes launched by the government, National Skilled development mission to cater to this growing demand of skilled labour.
- What is the biggest challenge faced currently by the Real Estate industry?
At present, the major challenging situation faced by the property markets is to familiarise themselves to the modifications in terms of newly implemented schemes like GST and RERA. Even though RERA is pertinent to all of India but the reality is that development in Mumbai Real Estate is on different level, being one of the expensive markets in the world the challenges faced by developers of Mumbai will be different than rest of the Indian developers. Developers also have to sync their future projects with government’s vision of affordable housing, but with property prices increasing rapidly these plans are getting harder to achieve. Also, with so many players entering the real estate sector, scarcity in availability of land has also become a major factor affecting the smooth functioning of real estate.
- What is your vision for Ekta World, in the
- Near term future, over the rest of 2017
- Long term, over the next 4 years or so.
2017, our focus will be on sales and execution of on-going projects, in the last quarter we will have a couple of launches. In the coming year we will focus on our acquisitions and business developments to expand our portfolio. Our focus will continue to remain in the luxury segment of the MMR region.
- According to you, what are going to be the trends that define the Real Estate of India and Maharashtra (especially MMRDA and Pune), over this one year?
With various modifications in its frame of regulations, India is now all the more attractive to both international and Indian realty investors. An augmented amalgamation and liquidity – and the launch of various reform measures like REITs (Real Estate Investment Trusts) this year – will additionally entice investments in the Indian property market. The segment of Affordable housing in India is finally all set to receive the much-desired infrastructure status. The realty market in India is going to become a lot leaner, with merging happening by methods of joint expansions and joint ventures between landowners with the organised players, smaller developers being bought out by larger property players. More developers will pursue our modules of growth organisation for their land parcels.
“Real Estate industry to have maximum incremental HR requirement”