The year 2016-17 was a year of landmark reforms, ranging from the formation of a strong regulator on one side to easing of foreign investor norms on the other. The year also witnessed a major thrust on affordable housing, a strong revision to the REIT guidelines and the passage of RERA-the most significant reform that the real estate sector has seen in the recent times.
Much has happened in the macro environment - successful demonetization; introduction of GST proceeding in the right direction; commencement of RERA; a booming stock market; monsoon expected to be normal, et al.
Full credit to our Hon. Prime Minister for successfully managing the demonetization of INR 500 & 1000 currency notes. This has resulted in lakhs of crore rupees getting deposited in the Banks resulting in increased money in circulation due to reduction of black money, increase in tax collections & number of tax payers, expected reduction in corruption, lower lending interest rates (good for business & industry), increased use of digital currency, among other advantages. Our Prime Minister debunked the criticism by many reputed economists and showed he means business by coming up with slew of well thought out supporting measures. Prime Minister Modi''''s vision backed up by clear cut strategies & implementation is sure to make him the BEST Prime Minister our country has seen, apart from making him an enviable Statesman to reckon with in the world order.
With the announcement of tax rates, the suspense surrounding the much anticipated GST seems to be over. Now it is a question of ensuring it is implemented both in the letter & spirit. The exemptions given and rates announced by the committee of finance ministers seems to be very fair. By & large, GST should help business & industry in overall reduction in costs which is expected to be passed on to the ultimate customer / consumer. But, there would be a settling down period and confusions / misinterpretation galore during 2017-18 at the least.
Similarly, there is bound to be confusion in the implementation of RERA. There are no experts in the industry or in the consulting community or in the government. Everyone will have an opinion, the correctness of which will be known over time once the RERA Authority / Tribunal starts passing orders. While RERA will have long term positive effects on the sector with no entry barrier resulting in all kinds of questionable characters entering the business, it is also bound to add cost due to delay in obtaining additional approvals from RERA authority before a project is launched. The real estate sector already suffers from the problem of dealing with too many civic authorities, who have been conveniently let off by the government from the regulations of RERA. Once the sector recovers from the impact & negative sentiments of demonetization, the real estate cost / prices should go up at least by 10% due to the provisions of RERA and the recently revised National Building Code for new projects.
Affordable Housing will soon become the flavor of the season for developers and consumers alike. Rightly so, what with more than 20 mn. homes to be built in the next 5 years to meet PM Modi''''s noble target of ''''Housing for All'''' by 2022, to coincide with the 75th anniversary of Indian independence. For the mission to succeed, the state government and civic authorities should give incentives (if not subsidy) by way of allotment of government / slum redevelopment land, reduction in stamp duty, reduced approval fees for building plans, water, sanitary & electrical utility connections for affordable housing projects.
Completion of 30 years in business is a significant milestone. One would have seen many highs & lows and weathered many a storm. It was no different for Brigade. What started as a single project venture has grown into what it is today. While I look back at the achievements, accolades, awards and landmarks created during the last 30 years, with a sense of pride & satisfaction, I realize that it is more important to look forward on what needs to be done, to continue to survive, grow & flourish to meet the aspirations of all stakeholders, for the next 30 years. It is a happy coincidence and a fitting tribute that during the 30th year of our operations, we completed 30 projects (across residential, office, retail & hospitality segments) adding up to 10 mn. sq. ft. in area.
Our Real Estate business has done relatively well inspire of various factors both international and national impacting the business. The group has sold 1.62 mn. sq. ft. of Real Estate space aggregating to Rs, 956 Crores with an average realization rate of Rs, 5,876 per sq. ft. for the financial year 2016-17. A total of 16.43 mn. sq. ft of residential space is under construction. The Lease Rental segment has contributed Rs, 266 Crores to the top line of the Company. About 1.89 mn. sq. ft. of commercial and retail lease space is currently under construction. The Hospitality segment revenues for the financial year stood at Rs, 193 Crores. The occupancy levels at Sheraton Grande was at 81% and Grand Mercure Bangalore was at 73%. The Group presently has 704 operational keys which will scale upto 2,000 keys in 3 years from now.
The scheme of arrangement for restructuring the hospitality business of the Company in to wholly owned subsidiaries has been approved by the Board. The same will be effective before the end of the next financial year.
Your Company raised Rs, 500 Crores through a Qualified Institutional Placement in April, 2017. The issue received a very good demand from both domestic institutional investors and foreign institutional investors.
Your Company will be launching 11.53 mn. sq. ft. during the financial year 2017-18. This will comprise of 5.02 mn. sf. ft. of real estate space, 5.76 mn. sq. ft. of Commercial Space and 0.13 mn. sq. ft. of Hospitality Space.
As we usher in a promising era, the dynamics of business is fast changing and it is imperative for us to excel fulfilling stakeholders expectations and building positive experiences in what we deliver to stakeholders. Thank you for your continued patronage, which only motivates us to leap to the next level of growth.
M R Jaishankar
Chairman & Managing Director