Exclusive: House of Hiranandani eyes distressed realty projects
Mumbai-based privately held real estate player House of Hiranandani, which has presence across Mumbai, Chennai, Bangalore and Hyderabad, is out to acquire distressed projects of developers to expand its portfolio, a top company executive told VCCircle.
The company is testing the inorganic expansion strategy for the first time with an aim to capitalise on its cash-rich position. Usually, a developer either buys a parcel of land in collaboration with a private equity fund or signs a joint venture with another developer on a revenue-sharing model.
“We have not been significantly leveraged; so we see ourselves in a capital-rich position this financial year. We are out in the market looking for opportunities where projects may have been commenced but due to lack of funding or expertise, they have not been able to follow through,” said Neha Hiranandani, director, House of Hiranandani.
She added this is going to be the focus area for the firm in the next six months.
“The benefit we see in this strategy has to do with land acquisition process – that is already taken care of and what we bring to the table is working capital without over leveraging ourselves,” she added.
While the developer is present across four tier I markets, it will follow this strategy only in Mumbai, Bangalore and Pune with Pune being a new market for it. It has been contemplating to add new territories in its portfolio for some time now and has zeroed in on Pune while putting Delhi NCR off the radar as of now. (Read here how Pune has proven to be an outlier in the real estate market)
The Indian realty market is going through a tough phase with sales continuing to slide over the last many quarters. While the top two markets, Mumbai (by value of transactions) and Delhi NCR (by volume), are worst hit, Bangalore and Pune have sustained on the back end-user demand for reasonably priced projects.
This has resulted in a cash-flow crunch for developers leading to projects either getting stuck or seeing multiple rounds of refinancing with cheaper debt replacing high-cost loan. Many developers have not launched projects in the last several quarters and are instead focused on executing ongoing projects with a hope to see a revival soon.
House of Hiranandani says it has stayed away from city centric, high-end projects in the last three-four years and has instead focused on launching projects in growth corridors in tier I markets at various price points. It will take this strategy forward this financial year too.
The firm is currently in talks to raise funds for its ongoing projects but the management did not share the names of the prospective investors or the amount it is looking to raise.
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House of Hiranandani is a real estate firm. It develops hospitality, residential and commercial projects in Chennai, Bangalore and Hyderabad. The firm s residential projects include apartments and commercial complexes. The company is based in Mumbai, Maharashtra.