Demand in real estate sector to sustain on better growth prospects for Indian economy

India remains a bright spot in global economy while the western world is reeling under high inflation. That is the reason that growth in the real estate sector remains strong despite sharp rate hikes by the Reserve Bank of India. Real estate and construction major BCD Group is witnessing strong demand for contractual project delivery partners. BCD Group, which has forayed into delivering its own projects across real estate segments, is also witnessing good response from customers. In an interaction with the

Bizz Buzz, Angad Bedi, Managing Director of BCD Group, said the company is the only real estate group which is zero-debt on its balance sheet. Around 15 million sq ft of projects are currently under construction and development phases, he said. He also said that the company will soon close a Rs500 crore worth Alternate Investment Fund (AIF), which will invest in various stress projects. Through this AIF, the company aims to resolve problems in projects worth Rs 5,000 crore in the future

How do you view the overall demand environment in the real estate state across segments? Can you give us a brief overview of BCD Group’s various operations?

BCD Group is at the forefront of construction for almost seven decades now. We have delivered key landmark projects across the country and the globe. In the last decade, we have been into the development of affordable housing, senior living, luxury housing as well as commercial tech parks. We have a very big labour force across states. What we have seen is the way of construction remained unchanged for almost three decades. But post-Covid, the trend has suddenly changed. Luxury housing, and houses with bigger spaces have come in demand across all markets. Similarly, the yield on residential assets has also gone up. That is the reason that people have not only started buying residential properties for living, but also for investment purposes. With six per cent plus return, these assets are able to provide better returns on investment. In the commercial real estate, it is yet to go back to the pre-Covid demand level, when the demand was at all time high in 2019. It is still in the phase of rising to the peak. While commercial real estate is yet to reach its all-time level, other segments have peaked up. For instance, warehousing is a big sunshine sector that has come in. This is driven by overall infrastructure development across the country. Players in the ecommerce and delivery companies are majorly driving this growth. As India enters into its golden decade, the uptick cycle is kicking up.

Rising salary levels, advent of startups, and related aspects are going to supplement this growth uptick. Moreover, health issues and related factors are driving demand for senior living. We have launched India’s first rental senior living model under the brand name of ‘BCD Vanaprastha’. We are seeing a lot of demand in this segment.

On the education side, we are seeing a lot of schools being built up towards the outskirts of cities owing to various factors. We are very bullish on this segment and are coming up with a housing brand named ‘BCD Gurukul’.

BCD Group has forayed into AIF space. Can you throw some light on this aspect?

We are also launching a Rs500 crore Alternate Investment Fund (AIF), which is getting subscribed. It is a stress assets funds. It is almost subscribed now and we will be announcing that very shortly. We have started looking for projects that are stuck across the country. We are looking at projects in Bengaluru, Hyderabad, Chennai, and Mumbai among others. We will provide them with capital. We are looking at resolving problems in stuck real estate projects worth Rs 5,000 crore through this fund. Across all asset classes, we are looking at. We have already deployed in six large companies. So, as we speak, the fund is already operational.

You are a zero-debt company. How do you manage to be a financially healthy group?

We are delivery partners for several decades. Now, we are at the forefront of delivery. We are probably only one real estate group with zero debt. We are the only construction conglomerate with zero debt. We are not talking about net debt, we are saying we are zero debt. That is the reason that we care a lot about delivery, we care a lot about execution, and quality. That’s what we have done as a construction player for several real estate firms for several decades and that’s what we are doing as a real estate player now, handing over the housing projects to customers in time with excellent customer experience.

What is the current order book of contractual projects?

It is around Rs 2,000 crore. We have recently made a big announcement that we have crossed Rs 1,000 crore as order book in south India alone. We are constructing a technology park, we are also building India’s largest SEZ in Tamil Nadu. We associated with Indian Oil’s refinery at Manali (Chennai). We are associated with some of the biggest luxury houses in Bengaluru. We are also building a high-end project in Lucknow. We are the only company which is building every asset class, from hospitals to schools to hotels to tech parks, commercial and residential properties.

What is the employee strength of BCD Group? What are key strength areas of the team as you transition to be real estate player from a being a project construction company?

In construction, our team is very professional and strong. With several decades of legacy, the current employees belong to the second generation. We are an organisation of 500 people today with a labour strength of almost 4,000 people across India. So, the construction vertical is very strong. The alignment between the staff and team is our core strength. Our board is very strong. We will be announcing joining of key people in our board in coming quarter.

You also have global footprints. How do you see it panning out in the coming future?

Yes, we have plans to expand operations overseas. We already have a base in Dubai. So, we will be expanding BCD’s footprints globally as well.

How much area is under construction and development by BCD Group now? Can you give some view on this aspect?

Currently, 15 million sq ft of area is under construction and development by BCD Group now. Out of 15 million sq ft, nine million is under construction and the rest six million is under development. Six million sq ft of project belongs to BCD Group and the rest is turnkey.

Do you intend to remain a zero debt company as you have now your own real estate projects? Will this reduce the return on investments for projects?

Our construction wing will continue to be zero-debt. But our development brand ‘BCD Royal’ which is coming in a big way, we will look at having financial partners. With our own projects coming up, there will be many financial institutions, we will be working with.