Brokers turn developers
Bigger city builders are going national, while local brokers are turning into developers, reports Ranju Sarkar.india Updated: Jan 08, 2007 02:45 IST
In the twists and turns of the nation’s real estate boom, bigger city builders are going national, while local brokers are turning into developers.
Bangalore broker Feroze Estate & Properties has become a developer. ‘‘Every builder today was once upon a time a trader or a real estate broker. I am developing my own property and will retain it,’’ says Feroze Abdulla, who has just leased 150,000 square feet to the Reliance group at Prestige Feroze in the technology capital’s plush Cunningham Road, where property prices have risen three-fold in three years.
Delhi-based Parsvnath also started as a real estate broker, and is an idol for many agents. ‘‘Broking is more of liaison. There is no great value addition except bringing the two parties together. In real estate, you need a lot of technical knowhow, say, on how you provide noise installation on floors or tackle the leakage problem,” says an industry expert. Hospitality player Panoramic Universal is now a real estate aspirant. ‘‘These are two different sectors. I can understand when a real estate guy gets into retail – there’s synergy. But moving from hospitality to real estate could be dicey,’’ said Susil Dungarwal of Bangalore-based Prestige group. But such comment from entrenched players does not deter firms like Panoramic, which is planning to raise $12 million through a global depository receipt (GDR) issue, after announcing its foray into real estate and getting listed on the National Stock Exchange in addition to BSE.
"We are not in the valuation game. The money is being raised for the hospitality business. The announcement on real estate was made to inform the stock exchange. We need to get the board approval and amend the MoU, before we get into real estate," says Panoramic’s chief financial officer (CFO) Utpal Parekh.
Not everyone is worried about such furious expansion. ‘‘This is not similar to the IT/dotcom story, where the valuation method was unreal. Real estate is an asset-based business, where the promoter puts in his money to grow the business. It is a mixed bag. You have to examine each case individually,’’ said Jaidev Mody, director, Peninsula Land, a Ashok Piramal Group firm, which recently raised Rs 160 crore for local investors.