In this special two-part series, we look at the changing skylines of major cities from the eyes of local developers. First, we travel to Kolkata and Bengaluru
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05 December, 2017byAshish SinhaPrint this articleFont size -16+There may be nothing common between the metro city of Kolkata and Bengaluru, except that both are state capitals. They are geographically apart by at least 1,900 kilometres. But a closer look at the fast-expanding IT-hub of Bengaluru reveals the presence of at least a million Bengali-speaking residents. Many among them work in the IT sector, others pursue higher education and seek better job opportunities within the city. Many of these Bengalis are driving the residential realty market of both Bengaluru and Kolkata, points out Nandu K. Belani, Chairman and Managing Director of Belani Group. The group is among Kolkata’s oldest real estate companies, having established its business 50 years ago. From the real estate point of view, both Kolkata and Bengaluru are end-user markets.Today, Kolkata is witnessing a realty boom of sorts in areas such as Rajarhat, Kalyani, Barrackpore, Baruipur, and Garia, with developers such as the Belani Group, Ambuja Neotia, Shapoorji, PS Group, Siddha Group and Tata Housing amongst others, actively changing the city’s skyline. We decided to interact with two such developers to better understand the dynamics of the local market.The Belani Group was established by the late K. P. Belani, a migrant from Sindh, Pakistan, who came to Kolkata in search of work.“He had no background in business or expertise. In fact, my father was a school dropout who learnt English by talking to people and reading newspapers. He began as a salesman somewhere in New Market earning Rs 10-20 a month. When an opportunity came, he and his partner bought a shop at an auction in New Market and sold garments and imported goods.They made money and started a cold storage unit in 1964 in Bardhaman before venturing into the real estate market in Kolkata. At the time, it was extremely tough to do property business due to the strict land ceiling laws,” says Belani who is also President of CREDAI Bengal, the apex body of real estate developers. Agrees Harshvardhan Neotia, Chairman of the Ambuja Neotia Group, another well-known realty firm that will soon complete 25 years in the business in Kolkata. “Because of West Bengal’s restrictive laws on private ownership ofland, developers could undertake large-scale projects only through joint ventures with the state government. Only joint sector companies could seek exemption from the ceiling on land ownership. In return, the state government mandated that at least half the units of each project undertaken by these joint sector firms would have to be reserved for people from low and middle-income groups,” recalls Neotia.Today the Belani Group is credited with delivering over 45 projects – both in the residential and commercial space in Kolkata – no mean achievement, considering the closed and restrictive nature of the market in West Bengal.“1969 was a very bad year for Bengal due to the Naxalite movement that saw the economic industries moving out. We were struggling in terms of getting rentals. We had to give three floors to the Food Corporation of India at about 0.80 paisa per square feet, because there were no takers,” recalls Belani. Belani senior began his business with the iconic Himalaya House in 1967, a commercial building offering 30,000 sq.ft. on plush Chowringhee Road. It was quickly followed up with another commercial building, India House, on Ganesh Chandra Avenue a year later. Then came Shakespeare Court in 1973 – a ten-storey residential building with 40 units on Shakespeare Sarani, a street in the central business district of Kolkata. A year later, the Belanis delivered two more residential buildings called Neelkamal and Neelambar with a total of 180 units in two ten-storeyed buildings. There were several commercial buildings in the offing in the 1970s and 1980s, including Continental Chambers (1979), and the IDBI Building (1983). The latest operational projects from the group include a commercial complex called Woodburn Central, and Convent Corner – both delivered this year. In the residential segment, they have Belani Unicorn, Hiland Willows, and Moore Heights spread across the prominent landmarks of the city.The Kolkata JourneyWhile the Belani Group was steadily building small residential and commercial buildings all through the 1970s and 1980s, other developers got their big break in the early 1990s. Recalls Neotia, “In 1993, there was an advertisement that the state government was looking for a partner to build social housing. We applied. There were some advantages as the government would help with land acquisition, and permissions for buildings would be easier to acquire. That was the main reason for us to get involved in the real estate business.” Neotia had by then spent ten years with Ambuja Cement and it was the right time to get into the real estate business. “In 1995, we formed a joint venture with the West Bengal government and that gave me an opportunity to go for my first large project. Udayan, our maiden venture, was launched in June, 1995. It was built on 25 acres and comprised a development of nearly 2 million sq.ft. of residential units for HIG, MIG and LIG segments. The project was declared a model housing project by the Union government. Our first delivered residential project, Udayan-The Condoville, was completed by June, 2002,” says Neotia.According to Belani, in those days (1980s-90s) if you were a builder and you did 50,000 sq. ft. a year, it was considered good. “The offtake was slow, the demand was high back then. In those days, ground plus four was a big thing. Towards the end of 1980s, we started getting 15-18-storeyed buildings. Then it gradually became 18 floors, and later 20-25 floors started coming up. We did the tallest building in Calcutta, Hiland Park. That was one of the first buildings with a community feeling. It is about 1.5 million square feet, a cluster of nine buildings,” says Belani.Initially, the regulatory scenario in West Bengalwas quite relaxed with fewer permissions required, says Neotia. “Urvashi, a township at Durgapur, was our first project outside Kolkata; launched in July, 2001 and completed by June, 2004. Subsequently, we had projects in Bardhaman, Siliguri, Haldia in WB. There were hardly any prominent developers in those cities. It helped bring about changes in the real estate market there,” Neotia adds. Now, even the Belani Group is stepping outside the city and the state. It is now working on projects in Chennai.Transformation of Bengaluru In the words of Ashish. R. Puravankara, “the Bangalore real estate market is predominantly driven by the unique trilogy of steady economic activity, end-user residential market and a high percentage of the white collar migratory population.” Puravankara is President of CREDAI, Bangalore, and MD of 42-year-old Puravankara Ltd, a leading developer of the IT-city that first started operating in Mumbai’s realty market in 1975. It was only in 1986 that the company shifted base to Bangalore, as it was called in those years. “Our first few projects came up in Mumbai’s western suburbs of Versova, Andheri and Malad regions. Each of these projects comprised about 15-20 residential units. Back then, the selling price of these projects was around Rs 150 to 200 per sq. ft. These were largely unexplored territories in the 1970s, but our Chairman and Founder, Ravi Puravankara, had the foresight of recognising the future potential of these suburbs,” says Puravankara.In 1986 that the company decided to shift its business base beyond Mumbai. “There were several factors that encouraged us to look out to other real estate markets. During that time, the Mumbai real estate industry had certain restrictions on acquiring land because of the Land Ceiling Act. At that point, it appeared that our ambitious future growth strategy may not come true due to the environment; the industry was largely disorganised and the corporate governance was not as robust and transparent as we would have preferred,” recalls Puravankara. The company zeroed in on Bangalore as the market showed great promise, had fewer developers and was comparatively better organised, he adds. “During that time the city was popularly known as a ‘Pensioner’s Paradise’. The Bangalore market was characterised by independent homes such as bungalows and villas. In fact, the concept of apartments did not exist here in those days,” says the MD of Puravankara, which has so far delivered nearly 60 projects including four commercial projects in the city comprising a total of around 35 million sq. ft of space. In 1988, the company introduced a theme-based gated-community living with the launch of their first project, Purva Park that comprised 600 units. “It was the most massive community-dwelling project at the time within the city limits. With the launch price of Rs 475 per sq. ft., this was the first gated-community project with a thematic design that Bangalore had witnessed,” says Puravankara.Today, Bengaluru has some very prominent builders including Sobha, Salarpuria Sattva Group, the Prestige Group and Shriram Properties amongst others. In 1995, a new entity called Shriram Properties was founded to cash in on the fast developing landscape of Bengaluru. Shriram Properties MD, M. Murli, recalls how he entered the real estate business. “I was in L&T before starting this business. I was looking at buying lands from the Shriram Group. They had hectares of land in Chennai and one property in Bangalore. It was not for Shriram Properties as Shriram Properties did not exist at that time – it was only Shriram Investments and Shriram Industrial Group. I was 28 then,” recallsMurali.Murali moved to Bangalore in 1998 and started the first project in June 1998. “It has been 19 years since we launched our first project, the Shriram Whitehouse, a residential project in North Bangalore. South Bangalore was more dominant back then; North Bangalore was a less preferred location. Bangalore was just becoming an IT city. The IT operations had just started,” says Murali. “We had to sell Shriram Whitehouse as a destination. It had 476 apartments. We did phenomenally well and brought in a lot of creativity in marketing and customer service. We were the first to bring in the securitisation of receivables in 2000. We also brought in innovation in selling, because there was no capital available to us back then,” he recalls.Since its early years, the company has grown in leaps and bounds, expanding outside Bengaluru to Chennai, Kolkata, and cities across Andhra Pradesh. In the 2008-2015 period, Shriram Properties delivered over 15 million sq. ft. of development with over 14,000 units across the country. Walton Street Capital and Starwood Capital invested $108 million in Shriram Properties, a strategic alliance that helped Shriram Properties to scale up. According to the company, HYPO Bank also made a commitment of $132 million for Shriram The Gateway,a special economic zone project. Through land acquisitions, Shriram Properties ventured into Andhra Pradesh and Kolkata. Since 2010, Shriram Properties has attracted several investments, including $85 million from TATA Capital and $72 million from TPG Capital. ASK Property partnered with Shriram Properties for $135 million of development in Bengaluru.Our objective was to present a slice of the transforming face of our realty hotspots. From the end-users market of Kolkata and Bengaluru, the concluding part of this series will focus on the Delhi NCR and the Mumbai Metropolitan Region, the two markets that have invoked tremendous investor interest. We will bring to the fore our interactions with developers in these two regions and their anecdotes about the changing city skyline, regulatory scenario and much more. Stay tuned.
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