No dearth of investors in West Bengal
In an interaction with Estate World, Sushil Mohta, Managing Director, Merlin Group, shares his views on the recently made investment to acquire land parcel owned by KMD, his future growth strategy, and the scenario of Real Estate investment in West Bengal
What made you to invest in this deal to take control of land parcel owned by Keppel Magus Development (KMD)?
New Town is the future of Kolkata. The area has been developed in a balanced manner with all social infrastructures being present in right proportion like wide roads, service and entertainment options, all round greenery etc. The strategic connectivity of the location, being close to the Kolkata airport as well as Salt Lake, makes it an attractive go-to-business destination.
We were looking for a good business opportunity in New Town for a long time. We found this opportunity for a sizeable development within the organised part of the town. It augured well for us when we observed that the project has already kicked its momentum post its launch with all plans approved and a completed Phase –I. We will continue drive the progress of the project through launching and executing the Phase – II of the project.
Keppel was very concerned about the track record and credibility of developers, with whom they will be initiating the transfer of the company. They wanted developers, with good track record, who can complete the balance part of the project with good quality without any compromise.
It is being said that KMD exited the state after complaints by locales. How true is it?
I do not think this is the reason. Keppel being a $6 billion diversified multinational company having interest in marine infrastructure, real estate and other activities, must have observed, evaluated aplenty on their current business focus and then finally have taken this call. The Real Estate market in Singapore is quite bullish, which happens to be home town of Keppel. Further, they are also very active in China, Vietnam, and Thailand. I see this as a strategic business call as they must be looking for best use of their resources.
Another reason stated behind the exit was lack of growth options. How far do you agree with this?
As I have already explained, every company has its own business plans. They must have found better business opportunities in other countries or areas, so they have exited from Kolkata. But this doesn’t necessarily translate that the growth options in this project is limited.
In past, many investors have moved out of the state. What could be the reasons for the same?
I do not agree that investors are moving out. The nationally renowned developers like DLF and Unitech are still there in Kolkata. They are completing their projects. Salarpuria from Bangalore have come to Kolkata and working on many projects. Ashiana Group from Delhi has come. Also, a number of funds are now exploring the possibility of investing in projects in Kolkata and around.
Is the ‘local’ factor important in Real Estate? Is it like developers can’t get success without local experience?
Real Estate is a sector where local land, local culture and system play an important role. But it is not always the compelling factors to judge a developer’s success who comes from another region and runs a business from outside.
For example – Merlin Group has ventured outside Kolkata and developing projects in Raipur, Ahmedabad, Jaipur, Chennai, Bhubaneswar and Pune. We have already completed a number of projects successfully outside Kolkata. Similarly PRESTIGE from Bangalore is working in Chennai and Hyderabad. Alternatively, a number of developers from North India are working in multi cities. Our other company South City Projects had taken over a project in Colombo, Sri Lanka and we have launched it successfully and completed its foundation.
We do not experience much difficulty in handling the projects those which are outside our hometown Kolkata. All one need is proper manpower and region specific knowledge to run these projects.
When any international player moves out, it is not healthy for the market. Do you think such exits will adversely affect the Realty Market of West Bengal and will discourage other potential investors?
I do not think that this will have any impact in West Bengal market. Firstly, there are only a few players from outside West Bengal and 95 per cent of the total real estate activities in the state are handled by local developers, who are financially strong and possess the capability of getting domestic and foreign investments Recently, Hi-land Group received a big chunk of investment from GIC, Singapore. There is no dearth of investors in West Bengal. All one need is a good project.
What are your future plans to develop this recently acquired project?
We have done a little bit of re-designing in Phase – II plan i.e. Elita Garden Vista and we have already launched the project. We have also started work-on-site. We hope to complete the project in 4 years from now.