Boom time for affordable housing
Niranjan Hiranandani, MD, Hiranandani Group, shows many emotions in this candid interview with Niranjan Mudholkar. Joy at industry revival, anger at lack of leadership, excitement for future and hope for his dream – a housing revolution
He is known as the Builder Extraordinaire and a business doyen whose opinion matters. In fact, he has been instrumental in several policy reforms for the sector. While his market predictions are seldom off the mark, he prefers to talk more about dreams and visions for the construction industry.
He said the industry would bounce back and it did. So when he says affordable housing would constitute 50% of the market, people will take it seriously. And to think of it, he could have actually said goodbye to construction and focussed on textiles – hadn’t it been for a letter from the union of his weaving unit in 1981. “That was actually a letter from God,” he says. Subsequently, he sold-off the textiles unit and focussed completely on construction. He never looked back after that. “Our passion for excellence helped us establish a firm footing in the industry,” he states. Of course, he has had his share of challenges. He has been engaged in litigation with MMRDA over the alleged misuse of the quarry land in Powai. He isn’t ruffled while talking about it. “Every project has its problems. Mine is a twenty year old project. The people who handle the matters now are not the same people who handled them then. They see things differently.”
Powai is of course a milestone project – for the Hiranandani Group as well as for the industry. It ushered in the trend of mixed use development in India. He is also engaged in litigation about what could have been another trendsetter – the first highway mall. And he is hopeful about it. Of course, he is more excited talking about the world’s third tallest residential building that his son is building in Dubai. “It will be another milestone,” he says.
So you ask him what are the key milestones of ‘his’ journey and he wastes no time in saying: “Every day is a new milestone; every project is a new milestone; every change in the economic scenario is a new milestone. And every shift in terms of financial engineering is a new milestone.”
As a director at Hudco, you were part of the team that formulated the ‘National Housing Policy’ under Shri Ram Jethmalani, the then Union Minister of Urban Development. The catch phrase at that time was ‘Housing Revolution’. The idea was to create surplus of houses. That idea still remains an idea. Tell us more about it and what needs to be done if it is to become a reality?
You have to understand that we have a dream. Housing should be as easily available today as food or clothing. I want an equal definition as far as housing is concerned and that is my aspiration and desire. I think it doesn’t matter who does it. Certain revolutions take place when the government plays a role while others happen when the private players are involved. In the case of housing, both will have to do it together. And up to now, both have failed.
When the British left in 1947, there were no slums in Mumbai. The rich would stay in houses; the poor would stay in chawls. Basically, everybody had legally constructed relatively decent shelters either self owned or rented. Sixty years after independence, 55% population of the richest city in India lives in slums. This is a shame. The reason why this happened is because things have changed in the last sixty years but regulations have not. Regulations have to be modified to suit the times.
I always give the example of our late Prime Minister Lal Bahadur Shastri who ushered in the Green revolution. And he did it through illiterate farmers at a time when means of communication were not as developed. Moreover, finance was a limitation in those days. Today the builders are not illiterate and we have the best means of communication available. Moreover, there is no dearth of money today. Moreover, technology is not a constraint anymore. It is only leadership that is lacking. I have been pushing this issue myself and I agree that I have not succeeded. But I don’t think we can blame any one person for this failure. This leadership should come from both the industry as well as the government. So I think there is a combination of failure. This is what I have been trying for – whether it is through the National Housing Policy or through scraping the ULCC or through various measures taken by the finance ministry. Hopefully, one day we will come to a situation when it will be as easy to get a home as it is to get a mobile phone today. There was a time when a mobile phone call cost Rs16 per minute both ways plus STD charges. Today, it is less than Rs1 per minute. We hope to bring a similar revolution in housing.
You were a pioneer of the concept of integrated township in India. Today, we have many such townships ready or coming up across the country. How would you analyse the evolution of this concept? Do you think it is heading in the right direction?
I think we were the first in India to bring the concept of mixed use township. There were several residential as well as commercial townships earlier but we made the first mixed use township. It is an evolution of the old Indian trading concept – ‘Aage dukan, piche makaan’ (Shop in front and home behind). Today, it is also called walk to work. But we brought it in modern India. Today, we can see several successful models of integrated townships in India and some of them are more successful than Powai. And we are proud that we were the first to bring it in India. I am quite happy the way it has evolved and it will continue to develop further.
Would you agree that there has been a kind of revival in the last 5-6 months as far as the residential sector in general is concerned? Is the trend likely to continue?
Actually, the revival started from the March of last month. In fact, I was expecting things would get better by June but they happened earlier and I am happy about it. The demand has picked up but all the stories about prices going up are grossly untrue. I am not saying that prices are falling but they are certainly not shooting up. They are quite stable. The demand for real estate is huge and residential sector is unbelievable.
With this revival, do you think the industry has already started forgetting the few but hard lessons it was taught by the recession?
Every human being, every business man and every country is like that. Once the bad times are over, you forget the pains and start enjoying the gains. It is a cycle. There’s always going to be a recession followed by a boom and so on.
Do you think this boom will sustain itself for some time?
The demand will sustain. But nobody can predict the prices. If the king of Saudi Arabia cannot be sure about the oil prices then who am I to decide the real estate price? Nobody can; but it’s good to speculate.
How do you see the industry evolving in the next five years?
I think it will be a great industry. But I have a prediction which not many people agree with. In the last ten year, the total business by the private sector for affordable housing country wide was less than 5% on a broad perspective. In the next ten years, it will be at least 50%. The growth will be huge in that sector. May be Hiranandani will do it, Or DLF will do it or Raheja will do it. But the business in that sector will be very large. It will be similar to what happened in the aviation sector. People realised that business growth was in the economy class or the low cost segment. Likewise, the growth will be fantastic for affordable housing in our industry.
How about the Hiranandani Group getting into this segment?
Of course, we will do it. But you know, we started Powai at Rs550 and today we are at Rs15,000. We started Thane at Rs1000 and today we are at Rs5000 plus. What do I do if the rich people come and buy?
Where do you see the Hiranandani Group in that time-frame vis-a-vis the industry’s evolution?
We have to understand that we are in the business of business. Whether we do textiles, whether we do infrastructure, whether we do power, whether we hospitality or schools; these opportunities will continue to grow. We will continue to divide our business into work of business and work of social infrastructure. Both require lifetime commitment. That is our strength as far as our group is concerned. And as far as the industry is concerned, the opportunities are far bigger. I don’t think there will be no downturn in the next five to ten years. The demand is so large that if we work sensibly there is not going to be any end to it at least in my lifetime.
A brief Profile
Mr Niranjan Hiranandani is the MD of the Hiranandani Group of Companies, a giant in real estate development. From his early beginnings of teaching chartered accountancy, he began his initial business by venturing into textiles with a weaving unit in 1981. His first spark of recognition in construction came with a project in Versova, Andheri in the mid-eighties. Often called as the man responsible for changing the skyline of Mumbai, Mr Hiranandani has received lots of accolades as well as criticism for the transformation of a land parcel in Powai from a quarry to what could be the country’s first integrated township.
He completed his schooling from Campion School, Mumbai and graduated with a B. Com Degree (Hons.) from Sydenham College standing Second in Mumbai University. Later, he completed his FCA from the Institute of Chartered Accountants of India. He is actively associated with and holds key positions in various government bodies, private and social organisations as well as educational institutions.