Bharti Realty’s Growth For­mula to be Light on As­sets, Heavy on Ex­e­cu­tion

Co to charge up to 12% rev­enue as fees for projects ex­e­cuted by it

The Economic Times - - Companies: Pursuit Of Profit - Kailash.Babar @times­group.com

Mum­bai: Bharti Realty, the real es­tate devel­op­ment arm of tele­com to re­tail ma­jor Bharti En­ter­prises, is plan­ning to fo­cus on as­set-light model of Real Es­tate As­set Man­age­ment (REAM) for its fu­ture growth in­stead of buy­ing land parcels on out­right ba­sis, said a top com­pany of­fi­cial.

The com­pany’s fully-owned sub­sidiary Bharti Land will be ex­e­cut­ing th­ese projects un­der the Real Es­tate As­set Man­age­ment (REAM) model. Un­der this model, the com­pany will be lend­ing its brand eq­uity and pay for the devel­op­ment man­age­ment of the pro­ject. The land­lord will be re­spon­si­ble for land, ap­provals, con­struc­tion cost, mar­ket­ing and bro­ker­age.

“Af­ter a long pe­riod, realty sec­tor is com­ing back to re­al­is­tic lev­els and for the prices to come to re­al­is­tic level, land plays a cru­cial role. For the past few years, land prices have shot up sig­nif­i­cantly push­ing realty prices be­yond the reach of home­buy­ers. An as­set-light model will al­low us to fo­cus on con­trol­ling the fi­nal prod­uct price thereby at­tract­ing and con­vert­ing more de­mand,” SK Sayal, MD & CEO, Bharti Realty, told ET. The Su­nil Mit­tal-backed com­pany will charge around 10-12% of rev­enue as its fees for projects ex­e­cuted un­der the REAM model and sold on out­right ba­sis.

For any pro­ject, to be leased, af­ter be­ing de­vel­oped un­der this model, the com­pany will re­ceive min­i­mum fees worth one year lease rentals to be earned from that pro­ject.

Bharti Realty re­cently emerged as the high­est bid­der to de­velop an area of nearly 2 lakh sq ft of re­tail spa- ce near the Delhi In­ter­na­tional Air­port. This pro­ject is also ex­pected to be ex­e­cuted by the com­pany through the REAM model.

Apart from this, the com­pany will ex­e­cute projects un­der joint devel­op­ment agree­ments and will fo­cus on gov­ern­ment or pub­lic-pri­vate part­ner­ships projects.

“Cash is re­quired in land trans­ac­tions. To mit­i­gate that (risk), we will only look at govt auctions. In res­i­den­tial seg­ment, we will not get into greenfield projects. We will in­stead jointly col­lab­o­rate with land own­ers,” Sayal ex­plained.

For projects to be ex­e­cuted un­der joint devel­op­ment agree­ments, Bharti will take care of ex­e­cu­tion, mar­ket­ing and sales ef­forts, while the owner will be re­spon­si­ble for land, ap­provals & con­struc­tion costs. The com­pany will be fo­cus­ing on the Del­hiNCR, Pun­jab, and Haryana prop­erty mar­kets for both, REAM as well as joint devel­op­ment projects.

ET ARCHIVES Co to fo­cus on as­set man­age­ment and joint de­vel­op­ments

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.