Tata Housing to double projects this fiscal

Tata Housing Development Co is looking to double the size of its developments this financial year. The Tata group company, which has close to 12 million square feet (msf) in various stages of development, intends to sign up another 12-13 msf by April 2009.

“A significant part of the new developments will be in the low-cost and affordable housing category as part of large township model development,” Brotin Banerjee, CEO & MD, Tata Housing, said.

“The slated objective is to bring up as much as 8,000-10,000 housing units in the Shubh Griha homes. And in the affordable category — the recently launched New Heaven segment — we will add another 10,000 to 11,000 units. These developments would be undertaken across 4-5 major cities,” said Banerjee.

“Metros and Tier I is what we are going to focus on in the near future — at least the next one-and-a-half years,” Banerjee added. Among the new markets the company is eyeing are Kolkata, Chennai, Ahmedabad and Pune, in addition to Delhi, Mumbai and Bangalore where it already has projects.

Banerjee said the company has structured its developments in such a way that the acquisition of projects doesn’t require huge capital. Under its joint development agreement (JDA) model, Tata Housing doesn’t pay the land value to the landowner upfront, which reduces the need to make huge provisions for capital expenditure.
“Approximately 70% of our developments will be through the JDA model. It allows for a payout over a period of time, enabling us to undertake numerous projects without worrying about the capex. The model also helps in lowering our risk factor,” he said.

Of Tata Housing’s 12-odd million square feet of projects across key markets in the country, 60% are under various stages of development.The company is in the process of getting clearances for the rest. These include a 50-acre township in Chandigarh, targeted at the very premium end of the market, another premium development at Khandala, and a 10-acre villa project in Goa. “These being premium projects, will be launched when the timing is more appropriate. As these are being done on a JDA model, we are in no hurry,” he said.

THDCL is also in discussion with some Tata group companies for developing land parcels. Those would be over and above the targeted 12-odd million square feet developments for this fiscal. “The reason we haven’t included them yet is because they are largely industrialised land parcels and may take over 2-6 months to get the clearances and approvals,” Banerjee said.

Banerjee said there is a huge demand in the affordable housing segment as compared with premium-end housing units. “Our analysis of the market reveals there is far more supply as compared to demand in the premium housing segment and most consumers are weary of putting more money in such offerings - especially if they already have more than one house,” he said.