MUMBAI: It is a group that is synonymous with Mumbai’s high-end luxury and historic landmark buildings. Its list of projects includes the Taj and Oberoi hotels, the Brabourne Stadium, the RBI, World Trade Centre and the NCPA apartments.
The 147-year-old Shapoorji Pallonji Group is, however, now betting big on the other end of the curve — affordable housing. Its real estate company Shapoorji Pallonji Real Estate (SPRE) has ventured into its first affordable housing project in Rajarhat, Kolkata, with SP Shukobrishti, and plans to extend this drive to other cities.
“We believe there is a huge market in the affordable segment and are looking at it seriously. We entered this segment in 2007 to cater to the highly under-serviced market and satisfy the social need of providing low-cost housing. We are now looking to considerably expand our footprint in this segment further across the country,” says CEO Kekoo Colah.
The company is examining this business model for Mumbai’s MMR region and the outskirts of Bangalore, Pune and the NCR.
Also on the priority list is the third phase of affordable housing in Kolkata, where the company rolled out 1,500 housing units of 1-BHK (bedroom, hall and kitchen), measuring 320 sq ft, at Rs 4.6 lakh, and 2-BHK of 480 sq ft at Rs 8 lakh last month. In all, the company has launched 7,700 housing units in the first three phases on a 150-acre site in the city. This Rs 2,700-crore project has been jointly developed with the West Bengal Housing Infrastructure Development Company and will eventually comprise 20,000 apartments. Of these, 12,000 are meant for the low-income group and the rest for the mid-income category.
Colah believes the group must first get its focus and delivery model completely tied up as “opportunities will definitely be there”. Yet, as he adds, one of the key drivers “for assessing whether to enter those markets or not” will be availability of infrastructure, or a commitment by the (State) Government to put it in place.
According to Ashutosh Limaye, Head of Research, Jones Lang LaSalle, the company has made a good call to expand its affordable segment in other cities and move beyond high-end projects in Mumbai.
Shift in focus
As part of its strategy to enhance market share, Shapoorji Pallonji is also looking at a gradual shift in focus from the IT and SEZ segments to residential and affordable housing. Its plans to increase its residential portfolio of 25-30 million sq ft by 50-70 per cent over the next five years.
“Everything new we are looking at will be in the residential segment as this takes up about 80-90 per cent of the realty market. Clearly, that is where the potential lies. So, typically, one to two years down the line, residential would play an important part in our overall portfolio,” says Colah.
The company is exploring opportunities in Bangalore, Chennai, Pune Hyderabad, Mumbai, Delhi, Kolkata and Nagpur to enter into joint development agreements with land-owners and developers.
“Though there are good opportunities, there is a certain limit to the top management focus that has to go into it. We do not have the organisational bandwidth to take on 20-30 projects across all cities. Moreover, there is enough potential in the Tier-I market,” says Colah.
The company is also gearing up for the first phase launch of its high income group residential project in Bangalore, covering a million square feet, by the end of this fiscal.
Located in the heart of the city, this project is being developed with local developer ETA.
“This will be our only residential launch in the pipeline this fiscal,” said Colah.
The $2.5-billion Shapoorji Pallonji Group is managed by Shapoor Mistry, son of former head Pallonji Mistry.
The Mistry family is the single largest shareholder of Tata Sons with over 18 per cent stake.