There is Enough Demand For Real Estate in Rajasthan

Investors Are Willing to Buy Good Quality Secondary Homes  

Over the years, the six-decade-old Bhumika Group has grown into a diversified business conglomerate with business interests spanning construction, real estate, warehousing, logistics, mining, textiles and manufacturing. The Group is currently doing a mixed-use development in Udaipur- Urban Square, the largest shopping mall in Rajasthan, spread across 1.8 msf. In this exclusive interview with Torbit Realty, Uddhav Poddar, Managing Director, Bhumika Group, talks about the growth prospects of real estate, particularly in smaller towns, emerging concepts and trends and his company’s future growth plans. Excerpts …. Vinod Behl

How do you look at the prospects of real estate in Tier 2-3 cities where your group is quite active?

Tier 2-3 cities have now become very prominent. The E-commerce boom has shown that small towns are today big on consumption. And as such retailers are very keen to grow into these towns. In fact, there is a list of 70 Tier -2 cities where the retailers have identified the opportunity to grow in the next 2-3 years. They are short of good quality real estate to expand. That is where the opportunity for developers like us comes in. We want to build good quality real estate shopping malls to expand into Tier2-3 cities..Residential is doing well everywhere including in small towns due to the improving economy.  Towns with big religious tourism potential are the ones offering low-hanging fruits. Good and faster road, rail and air connectivity hold the key to real estate growth in Tier 2-3 cities.

What kind of new real estate concepts do you foresee? 

Retail real estate and hospitality are back with a big focus. So is the case with premium housing. Leading hospitality firms are posting all-time high results. The government is giving so much priority to air connectivity in smaller cities/towns. Tata Group has placed the biggest order for planes in global aviation history. That will give a big push to tourism, in turn boosting hospitality. In hospitality, besides traditional hotels, the concept of apartment /villa hotels has come up in the last 2-3 years. We have done it in our Urban Square project in Udaipur. In this concept, the developer sells each villa /apartment to investors, running it like a hotel and giving hospitality returns to investors. This concept is working well.

I also see logistics and warehousing doing very well. Data Centres are doing well. All these are new trends in the alternative asset class of real estate. In retail, the concept of recreational reality is gaining more strength.

How do you see the scope of vacation/secondary homes?

Post- covid, people explored that there is beauty in staying in a tranquil/ isolated place as long as it is well managed. This provided momentum to the concept of villa/secondary homes. There are many companies including Taj Group which have committed to managing such villa properties. There are a lot of investors who are willing to buy good quality secondary homes and there are a number of real estate players who are developing such secondary homes and selling them to investors.

How do you find the trend of institutional investors owning shopping malls?  

Real estate including retail real estate is attracting a lot of institutional investment. Global institutional investor Blackstone is now the largest shopping centre owner in India. It has already filed for its REIT in retail. I see a lot of other players originally active in the office real estate space, now getting into retail real estate as institutional investors. Unfortunately, till now institutional investors have entered only after the asset is built and they only want to buy the asset. None of them have come in at the development stage. I am hoping to see that change happening in the next 2-3 years.

Your group is also into logistics- a hot alternative asset class of real estate. Going forward, what are your plans on this front?

We have specialization in the cement logistics business and are operating in three states. We are expanding quite aggressively into that space. There is a lot of consolidation happening in the cement industry which provides an opportunity to us to grow. Even the government has come up with certain schemes for railway stations where they are looking at warehousing players to partner with them to build warehousing infrastructure. We have already applied to the tender for a couple of railway stations and we are keen to work on that as well.

How do you look at the prospects of real estate in Rajasthan in the coming days?

Rajasthan for whatever reasons did not get the best quality real estate till now. Very few great projects have come in until now. There is enough demand for good quality real estate and now Rajasthan is emerging as a promising real estate destination. The state has a strong industrial base and enjoys the advantage of having Delhi-NCR on one side and the Delhi-Mumbai Industrial Corridor crossing it. RICCO, the nodal agency for selling industrial land in Rajasthan has reported 10 times to increase in land sales in the last 5 years. With this industrial boom, urbanisation will happen in all kinds of real estate,

How is your organisation gearing up to leverage this opportunity?

We are adopting a two-pronged strategy. We have already made a great mall -Urban Square in Udaipur which is fully functional with good footfall. It is like a prototype for us As we have understood the mall business well, we will be building similar kinds of shopping malls in Tier 2 cities. We will be stated agnostic and go across the length and breadth of the country. We are also looking at high-street retail opportunities at strategic locations and will not go outside Rajasthan and Delhi-NCR.  We will leverage the opportunity in residential real estate as well. We do not plan to do very large projects until it is a villa/plotted development. In case of high rises, we will do small/boutique projects at central locations.

BLURB: Unfortunately, until now the institutional investors have entered only after the asset is built and they only want to buy the asset. None of them has come in at the development stage. I am hoping to see this change happening in the next 2-3 years.