Raymond Realty to invest Rs 700 crore on a commercial project in Thane

Raymond Realty plans to develop a ‘Grade A’ commercial and high-street retail space in Thane on 9.5 acres of land, with an estimated investment of around Rs 700–800 crore, CEO Harmohan H Sahni told Moneycontrol.

“The company intends to invest close to Rs 700 to Rs 800 crore for construction of the commercial project, which is expected to take off in the next fiscal. Construction and launch of the commercial project is expected to take place in March-April 2022. Currently, we are at the planning stage. Construction is expected to begin in March 2022 and the asset is expected to be operational by 2026. The million square feet of land that Raymond Realty intends developing as part of the first phase is already owned by the company, so there is no investment in the land per se,” Sahnisaid.
Sahni however also added that it may take four years for the asset to be fully constructed, leased out and operational. The company may consider a combination of equity and debt or get in a strategic investor. “All of these options are possible and discussions are on. The cost is in place already. We know what we want to build. We are discussing the funding bit right now,” he added.

Demand rebound
Sahni said that most commercial markets, such as the Mumbai Metropolitan Region (MMR) and NCR, are witnessing fresh demand after two waves of the COVID-19 pandemic, with demand bouncing back to the extent of 80-85 percent, which is “encouraging.”

“The numbers look good in the MMR market with demand of around 3.5-4.5 million sq. ft per annum in fresh commercial supply compared to 16-17 million sq. ft in Bengaluru, which is the largest market. Mumbai commands about 25 percent of Bengaluru’s total demand. Pune is in a similar range and NCR is around 5 million sq. ft or so. Hyderabad commands 7-8 million sq. ft per annum,” he said.

Having said that, Grade A commercial stock is definitely in short supply in MMR and “that is what prompted us to get into a Grade A commercial at this point in time. You either have IT and ITeS buildings or B grade buildings,” he explained.

Joint development focus
The company announced its foray into the commercial segment on October 5, 2021. It is also evaluating several options through a joint development agreement without land acquisition in MMR.

“We are exploring joint development opportunities in the MMR. There is sufficient work in Thane for the next 10 years. We plan to construct facilities through joint development with a potential to generate revenue of Rs 2,000 crore each. We are hoping that the potential of each deal would be in the range of Rs 1,000 to Rs 2,000 crore. We are not looking at very small or mega size projects but medium size projects,” he said.

So far, Raymond Realty has sold over 70 percent of the total launched inventory of nearly 2,350 units at its maiden project, called 10X. The township project’s first phase has 10 towers spread across 14 acres, with a saleable area of 2.8 million sq. ft.

The company now plans to build premium residential units comprising 3 and 4 BHK units spread across a million square feet, subject to requisite approvals, and intends to take a bank line worth Rs 100 crore to Rs 150 crore for it.
The 10X project with its 1 BHK and 2 BHK units “is a cash-surplus project for us. All our investments are back and more. Our net debt is zero. We are sitting on a cash surplus on that. For the launch of the new 3 and 4 BHK project around Diwali, we have only invested in approvals, which is not a significant amount. We would have spent Rs 10-15 crore on approvals so far. It is a residential project and residential projects typically do not require too much capital. We will probably contract debt and keep it on the safe side. Our estimate is that we may not even have to draw the debt that we contract, going forward,” he added.

Source: Moneycontrol