Wednesday, March 4, 2009

Update on Builders

I think now be a good time to give everyone an update on where things stand today as MHFC gets ready to launch.

For starters, since we are project led, the most important update is on the builder/project front.

TM City:
Our team visited TMCity two weeks back and was really impressed by their progress. The last time I went there they barely had one mock building up (This was only 4-5 months back). Now almost 54 buildings are completed at foundation level and about 5-6 till the first floor. They are confident of completing about 3000 flats by the end of August and a 1000 more by December

Nirman Realty:
We recently met the promoters of the Nirman group. They are building about 228 flats in Neral (near Karjat, where TMCity is located). They also have land banks in western and central areas of Mumbai and showed great enthusiasm in partnering with us. The meeting reinforced our belief that the main cause of lack of housing is not really a lack of developers, but it is the lack of financiers for the end-buyers. Once the builder is assured of the take out funding, in today's market, he is more than willing to put up mass low-cost housing projects.

Virar / Nalasopara:
When we had gone last time to take a look at some of the near-ready properties, frankly we were quite disappointed with the lack of planning (inefficient use of FSI) and poor quality of construction. We realized that MHFC will have to be involved from an earlier stage in a project to ensure decent floor plans and good quality of construction. Our mission is to improve the quality of life of the urban poor - not lift them from a slum to put them back in a concrete slum. We have identified a couple of builders in the area and are in talks with them to be the almost the exclusive financier to the whole project. That will give us enough leverage to ensure a decent finished product.

There is positive news from Ahmedabad too - the two builders we were talking to have got their environmental clearances and are set to start their projects in April/May. We are planning to go visit the sites again next week - more update on that will follow.

Overall, all the builders seem to be realizing this is a recession proof business and are willing to work on lower margins and higher volumes.

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