Essar Group realty arm Equinox Realty is looking to monetise part of its Rs 3,000 crore investment in commercial and residential spaces before going in for expansion.
However, any further investment will be after the elections to the Lok Sabha next year, said Cherag Ramakrishnan, Director, Equinox Realty.
The company has a 1.2-million-sq-ft commercial complex project in Mumbai, where it has completed about seven lakh sq ft. It is also developing a two million sq ft high-end residential project in Bangalore.
The occupancy rate is about 75 per cent in the Mumbai project, with lease rentals of about Rs 165 a sq ft.
The Bangalore venture, which was launched 18 months ago, has logged bookings of over 150 apartments, each upwards of Rs 2 crore.
On the rationale behind monetising assets, he said it is only logical that the promoters would want to churn a bit of their capital.
This could be in the form of some stake sale, and in the case of the commercial project, could be even refinancing, as for rented property one need not sell.
Ramakrishnan said it was better to monetise a real estate project midway as there were mezzanine investors keen on picking up good premium projects that come from strong brands.
The promoters too, stood to benefit as more development could take place.
“We are looking at assets but in no hurry to chase them,” he said.
The company has 3-4 years work in terms of execution and six lakh more sq ft to lease out in the commercial venture.
Asked whether the company was interested in distressed assets, Ramakrishnan said such assets came with their own set of problems.
On whether Equinox was weighing joint development, he said the fundamental issue in the model was that one needs to underwrite the project cost and it worked well when prices moved up.
As of now, even leading developers were moving to development management or profit sharing instead. .
Terming the Mumbai commercial real estate scene a disaster, Ramakrishnan said it would remain that way for over three to four years.
Rental values had corrected 20-30 per cent. In the next two to three years, one would be lucky to rent out space, he felt. On the residential side, he felt it appeared insulated from the larger economy as demand exceeded supply.