Political stability fuelling Hyderabad realty growth

Aparna Constructions and Estates, founded in 1996 by classmates S Subramanyam Reddy and Chennuru Venkateswara Reddy, needs no introduction. The realty major, which closed last fiscal with Rs 900 crore in topline, completed over 20 million square feet of residential space till now with additional 15 million sft under construction.

It completed nearly 30 projects including one in Bengaluru and has seven more under construction. “We are planning to spread our operations across South India by foraying into Chennai in Tamil Nadu and Kochi in Kerala. Aparna Constructions will also enter affordable and ultra-luxury housing segments besides commercial realty,” Chennuru Rakesh Reddy, the company’s Director and son of C V Reddy, tells P Madhusudhan Reddy

What is turnover of Aparna Constructions? Where would Rakesh Reddy like to take it to in next 5-10 years?
Aparna Constructions and two other group companies including Aparna Shelters closed last financial year with about Rs 900 in topline. We are hopeful of crossing Rs 1,000 crore this year. We are clocking around 20-25 per cent growth year-on-year. This growth will continue, and we will have a topline of Rs 2,000 crore in five years.

Many say buying a property from Aparna Construction is an expensive proposition compared to other companies. Why prices are high in Aparna projects?
Yeah, it’s true. There will be at least 10 per cent variation in prices when compared with others. That’s so because we offer higher quality units. We do over 300 quality checks before handing over units to customers. For instance, RERA Act now mandates five-years of structural stability. But we have been giving such a guarantee even before RERA came in. Further, gated community as a concept matured in the city in last three to four years. But we have been offering gated community projects from the inception. We offer wide range of residential units, priced from Rs 36 lakh to Rs 6 crore (villas).

Are you looking at diversifying into new segments?
Yes, we were exploring new areas. One area we have not yet tapped is affordable housing. We are now pursuing it very actively because this concept is gaining traction in Hyderabad. However, the definition of affordable housing varies from place to place. In Mumbai, the price range of affordable housing is very high. As Hyderabad is still the cheapest metro in India, any residential unit priced below Rs 50 lakh can be considered as affordable. However, we need to zero in on suitable land parcels for such projects as land prices went up abnormally in the recent past. However, we identified five land parcels. We may launch one such project in a year.

We will also enter commercial realty including retail and warehousing. We just received approvals for setting up a 3-lakh-sft mall at Nallagandla in Hyderabad. We will invest Rs 130 crore on it. Further, we will construct three commercial buildings besides taking up an ultra-luxury project.

Real estate sector in Hyderabad and Telangana went through sluggish phase till 2014 due to the Telangana movement. How the sector is doing now?
People shunned Hyderabad market and started investing elsewhere a few years back because of political instability. Now, the political stability is back and there is a stable government in Telangana. As result, people are coming back and investing in Hyderabad. With sentiment improving, sales are increasing, and the sector is doing extremely well now. For instance, over 8,000 residential units were sold in the first six months of this year, a growth of 30 per cent. That kind of sales happened for the first time after a gap of five years. There is also decent appreciation of 5-10 per cent in property prices.

Property prices have gone through roof in Hyderabad in last one year or so. In areas like Shankerpally, there has been a four-fold rise in land prices. Some say this is an artificial boom which will burst soon. How do you react to it?
There is no fundamental reason as to why land prices have gone up so much in a short period. Moreover, this steep price rise has not reflected in the end-product – apartments. So, I strongly feel that there will be some correction. But it will depend on how the election results pan out.

Will the early polls adversely impact the real estate sector?
Frankly speaking, we have not yet started feeling the heat of elections because campaign is yet to kick off. But I don’t think early election will have any bearing on the sales. However, there will be huge correction in land prices if early polls churn out a fractured mandate. It doesn’t matter for the sector whether TRS or Grand Alliance wins elections. Whoever wins should get a clear majority. That’s what matters the most.

How did policy initiatives taken up by the Telangana government help the sector? What kind of new policy initiatives are needed to drive realty sector's growth in Hyderabad?
T-Hub, the startup hub set up by the government, has tremendous positive impact. Bengaluru's growth as IT hub has been fueled by startup culture. Most of the companies including Infosys started their operations as startups in that city and grew into MNCs, thus creating wealth and jobs. Same thing can happen in Hyderabad if the government encourages startups. The government also improved infrastructure including roads. Hyderabad Metro also has positive impact. Land prices along metro corridor went up. Further, speed of approval process for real estate projects has gone up. But single down approval mechanism if implemented will do wonders.

Andhra Pradesh is developing a Greenfield capital Amaravati. What is your take on the real estate sector in Amavarati?
Our group company launched a Rs 350-crore project, Aparna Amaravati One, at Tadepalli in November last year, with apartment prices starting from Rs 1 crore. As land prices are very high there, that kind of unit prices are a must to make projects viable. But we are clocking average sales there. Amaravati market can do much better.

Do you have any plans to take up more projects there?
We will take up more projects if demand picks up. But there has been a slow-down in that market in last two years. My opinion is that lot of money that has been invested in Amaravati realty is coming back to Hyderabad as market is stagnant there.

Land prices in Amaravati skyrocketed as people invested there, expecting faster development which did not happen. Moreover, land prices are extremely low in Hyderabad even when compared with the prevailing prices in some of the villages around Amaravati. Besides, Hyderabad is a developed city. Therefore, money is flowing back into this market.