Shriram Properties buys stressed assets

Shriram Properties, the real estate arm of the Shriram group has acquired 10 pieces of property that were stressed assets, said a top official.

“Recently, we signed pacts with various stakeholders to acquire 10 stressed assets of other builders in Chennai, Bengaluru and Kolkata,” said M. Murali, MD, Shriram Properties. “It was acquired at a discount ranging from 20%-30% of market value.”

While declining to reveal details, he said the firm had recently raised ₹1,000 crore, of which 20% was earmarked for this purpose. “[We are eyeing] the mid-market segment, with total target space of five million sq.ft.” He said in some cases, Shriram Properties would buy out the property and in others, it would manage and develop stressed assets for a fee. “We will enter into deals with financial institutions and builders of stressed assets, [before developing] the project. We have the first say on realisation value. We aim to develop 5-6 [such] projects of 3 million sq.ft. this year.”Besides, Shriram Properties has deployed a development management tool to sell its own properties. For this, it has engaged channel partners and its managers to develop and sell projects.

Through this process, it has already sold 400 units in Chennai in three days and 500 residential units in Bengaluru in five days during the third and fourth quarter of last fiscal. This model has already caught the attention of other builders, he said.

“While other builders are struggling to sell their residential or mid-market projects, we have been adopting an innovative marketing strategy and a development management tool,” he said.

Real estate boom

Mr. Murali predicted that real estate sector would witness a boom in the next 2-3 years, as the situation was conducive due to the implementation of the Real Estate (Regulation and Development) Act, rising confidence among buyers and fence sitters, an increase in the demand pie and prices offered by brands being reasonable, among others.

“The real estate sector has picked up in the last two quarters. We expect the boom to start in southern States, followed by Pune and Kolkata. It would be slower in Mumbai and the National Capital Region,” he said.

In FY19, Shriram Properties would be unveiling about 10 projects in Chennai, Bengaluru and Kolkata. This year, the firm plans to develop 40 lakh sq.ft. of residential space against 24.4 lakh sq.ft for last year