BANGALORE/ MUMBAI: PrashanthSambargi, partner at Bangalore-based real estate brokerage firm Mars Realty, is these days busy designing residential projects for two land parcels he owns in the IT capital of India. “I am now looking at smaller size projects with 18-40 units with 20 months’ turnaround time… big builders do not enter this segment,” he says.
Sambargi is among a growing group of property brokers turning builders, armed with huge savings from their booming business and a ground-level understanding of what homebuyers want as well as the issues faced by developers.
Like Sambargi, who plans to float a separate company for real estate venture while continuing with his brokerage business, many brokers are opting for smaller projects of 10-30 units in relatively cheaper locations to get into the capital-intensive business. Many are entering into joint development pacts with landlords or developers.
Silverline Realty, another Bangalore brokerage, has already floated a real estate arm. “We are looking at growing slow and not taking huge projects as the business is at nascent stage and there are many establish name in the market,” its director Zahed Mahmood says.
Started by Farooq Mahmood who earned a brokerage of 8,000 for his first deal, Silverline today owns large land parcel across Bangalore and has five residential projects with an average price of 7,000-10,000 per sft in the development stage.
It is entering into joint development with builders like Prestige Estate Projects to penetrate deeper in the market. “Our brokerage business is growing at 20-25% quarter-on-quarter and helps us channelise our resources into the new business venture,” Mahmood says.
According to property research firm PropEquity, 13,797 residential units were sold in Bangalore in the first quarter of the current fiscal, up from 9,742 units absorbed in the year-earlier quarter. “Bangalore has been performing well with a 58% increase in new launches and 42% increase in absorption in the first quarter,” Samir Jasuja, Founder and CEO of PropEquity, says.
Bigger markets of Mumbai Metropolitan Region and National Capital Region (NCR) saw absorption of 15,501 and 26,798 residential units, respectively, in the first quarter. Property business has been booming across Indian cities, helping brokers increase their business manifold both in terms of the deal value and the number of transactions. And most tend to park their money in a market they best know-property.
“Project delay hits your clientele. There are many projects, which have been delayed for years. My focus is on-time delivery and doing projects in smaller towns where land prices had not shot up,” says Deepak Kohli, director of Deep Realtors in Delhi, who has launched a real estate firm, Abode. Kohli, who started his real estate brokerage and consultancy business 15 years ago, now has three residential projects and one four-star hotel project in Vrindavan at different stages of planning and construction stages under Abode.
“Brokerage is still a lucrative business with raw income, but I do not focus on it anymore and has put it on the backburner,” he says. Another Delhi-based mortgaged professional Mrityunjay Kumar has started a 700-unit group housing project at Noida Extension in a joint venture last year.
“I had worked with builders for mortgage and knew the business well. However technical know-how and competing with big brand in the market continues to be a challenge as I have to depend on my colleague for it,” says Kumar, who has worked with Reliance capital as branch area manager and ICICI Bank, decided to foray into real estate seeing demand for low income homes.
Two decades-old broking firm Realistic Realtor is setting up a million sq ft mixed used commercial property in Gurgaon with investment from high net worth individual and small investors. The ground-level experience helps many broker-turned-realtors to deal with regulatory and financing hurdles that challenge new entrants.
Manoj Nihalani, MD at Mumbai-based Pacific Landmarks, says, “The ground-level experience we had as a broker helped us in overcoming these as we were aware how funding management and other things could be resolved through stock selling, incentivising customers and contractors.” New launches driven by higher sales across some of the major markets have made property brokers in big cities turn to real estate development business to tap the market.
Organised developers launched around 38,000 residential units in the first quarter of 2013 in major cities with mid-range segment constituting 60% of the total. Bangalore contributed 31% of the overall new supply in the top eight cities followed by NCR and Mumbai, according to real estate consultants Cushman & Wakefield.
Source: The Economic Times