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Finance plays a critical role in the real estate industry as it provides the necessary capital to purchase, develop, and maintain properties. Real estate investments require significant amount of capital, and finance enables individuals and businesses to access the funds needed to acquire and manage real estate assets. Real estate by its nature is a capital intensive industry. The real raw material to scale up the business is Capital. The developers can scale up their game if capital is available at the right time. The liquidity raised via finance at the right time and used for the desired purpose can significantly increase the ROI. Many institutional lenders have evolved to understand the real estate business and designed various lending models. It’s great to see the focused lending teams who understand the inherent nature of the business and then offer lending products. The real estate developer can consider raising finance at the early stage in the project where the approvals are just received and the sales have started. The projects where the stage of construction has progressed, lenders look at such projects more positively as there is some established track record of execution and sales. The quality of capital available is way better in case of structured finance which gives more flexibility to developers for deployment of funds.   Sources of Real Estate Finance Let’s explore some common types of real estate financing options available to developers and investors:     Traditional Bank Loans: Traditional bank loans are commonly used to finance real estate projects. These loans typically offer competitive interest rates and flexible repayment terms. Developers can utilize these loans for land acquisition, construction, or refinancing existing debt.     Construction Loans from NBFCs: Construction loans provide short-term financing to cover the costs of constructing a property. These loans often have higher interest rates due to the higher risk associated with the construction phase. However, they can be tailored to match the project’s cash flow requirements and typically offer interest-only payments during the construction period.     Joint Ventures and Partnerships: Collaborating with other investors or developers through joint ventures or partnerships is an alternative financing option. By pooling resources and sharing risks and rewards, developers can access additional funds to undertake larger projects.     Private Equity and Venture Capital: Private equity firms and venture capitalists are increasingly participating in real estate investments. These entities provide capital in exchange for an ownership stake in the project or the potential for significant returns upon completion and sale of the property. This source is limited to organised and especially listed developers.     Real Estate Investment Trusts (REITs): REITs offer an opportunity for individuals to invest in real estate without directly owning properties. REITs pool funds from multiple investors and use them to invest in various real estate ventures, including construction projects. Investors can benefit from regular dividends and potential capital appreciation.   Financial institutions such as NBFCs (Non Banking Fiancial Institutions) play a crucial role in providing access to capital for real estate projects. Here are some situations in which finance can be raised from financial institutions.     Land Acquisition: When developers identify a suitable piece of land for their project, they often need financing to acquire it. Financial institutions can provide loans or lines of credit to cover the land purchase costs, allowing developers to secure the desired property.     Construction Financing: Construction projects require significant capital to cover various expenses, including materials, labor, and overhead costs. Financial institutions offer specialized construction loans tailored to the unique cash flow requirements of these projects. These loans are disbursed in stages or based on specific milestones to ensure that funds are available when needed.     Bridge Financing: In certain situations, real estate investors or developers may require short-term financing to bridge a gap between the cash inflow from customers and the amount of payment required to get the approvals (in the form of TDR, Premium FSI and other statutory payment) which is required in the early stage of business. Bridge loans, provided by financial institutions, offer interim financing until the long-term financing is secured by the developer.     Inventory Finance (Last Mile Funding): Typically the projects which are at the last stage of development at times may have inventory of units which will be sold over the period of 12 to 24 months. In such situation, the real estate developer can consider the inventory finance where the future cash flow from this inventory will be discounted to current date and given to the developer. This inventory finance can be used for acquiring new projects or the use of funds for the general corporate purpose.     Structured Finance: Structured finance in real estate refers to intricate financial arrangements where multiple projects are combined to create tailored loan products. The objective of such fund raise can be for the scenarios such as giving exit to a partner or use of the borrowed funds to acquire another project. Financial institutions along with professional advisors devise such solutions.  In summary, the liquidity plays key role in defining the real estate operations and the ROI. The institutional funds if used with discipline, can fuel up the progress and drive more profitability.  Real Estate project finance in nutshell is discounting the future cash flow of the project and making it available to the developer to execute the project faster. Raising finance has become relatively easier in the recent time. If the developer has good execution track record, they can take help of institutional finance to scale up faster. By leveraging appropriate financing strategies, such as inventory finance or structured finance, developers can secure the necessary capital to acquire land, construct properties, and maintain inventories. With a proactive approach to finance, the potential for growth, profitability, and success in the real estate industry becomes within reach. So, seize the opportunities, explore the financing options available, and embark on your real estate ventures with confidence and financial support.   CA Mohnish Katre Partner

As Jaatin Dhansukhlal Suratwala, the Managing Director and Chairman of Suratwwala Business Group Ltd, sits down to talk about his journey, one can sense the passion and emotion in his voice. The Suratwwala Business Group Ltd was founded in 2008 by Jaatin and his Family Members, and since then, they have been actively involved in the Real Estate field. From humble beginnings, the Suratwwala Business Group has come a long way, and today, it is recognized as one of the top-performing companies in the Real Estate Sector.   The journey has been anything but easy. After completing his Degree in Metallurgy, he had to work in various fields due to family issues. However, he never gave up on his dreams and started his own businesses in various fields, including FMCG Trading. It was through a friend’s recommendation that got a business opportunity in Real Estate. Instead of just investing in the project, he sought a business partnership, and that marked the beginning of his journey in the Real Estate Sector.   Dedication and aspirations are, what set the great apart from the merely good. Such is the philosophy of Jaatin Suratwwala, the ingenious businessman and Founder of Suratwwala Business Group Ltd. Jaatin has demonstrated an unwavering commitment to his dreams, turning them into a resounding success story in the Real Estate Industry. His unwavering pursuit of excellence earned his company the prestigious ‘Top Performer’ Award from BSE SME in 2021. The Suratwwala Business Group has been actively involved in the Real Estate Sector since 2004, and today, it has become a household name in Pune, Maharashtra. The Company is the only Real Estate player in Pune that has been listed in the SME segment since 2020, and its shares have gone from being priced at Rs. 15 to Rs. 175.   The Suratwwala Business Group’s Hinjewadi Project is a testament to Jattin Suratwwala’s vision and dedication. With a total of 7 lac sq.ft., this Commercial Project is being developed in phases, with the first phase being delivered four years ago, and the last phase being launched recently. The entire project is set to be completed by 2026-27. This project is a prime example of Suratwwala’s commitment to deep learning of the business ecosystem and placing the customer at the center of all operations. By understanding what the customer wants and delivering on those expectations, Suratwwala has gained the trust and loyalty of customers, cementing the Suratwwala name as synonymous with reliability and customer satisfaction in the Real Estate Industry.   Jaatin’s intellectual prowess and innovative spirit were put to the test when he launched the Company’s first project, the redevelopment of a small 2000 sq. ft. plot. Undaunted by the challenge, Jattin embraced it with open arms, and the project was a resounding success. From there, his Company took off, with the development of a gated community of more than 225 villas in Kasaar, Amboli, as well as a resort and villas in Temghar, near Lavasa. The company is also venturing into the field of Solar Energy through Suratwwala Natural Energy Resource (launched in 2023), providing net metering and contracting services.   Jaatin’s principles of deep learning the business ecosystem and keeping the customer at the center have been crucial to his success. He is acutely aware of what his customers want and expect, and he delivers on those expectations. His philosophy of keeping customer satisfaction at the forefront of every project has been key to his success. Jaatin has stated, “Our real income is the happiness on the customer’s face when he gets possession of his house.”   The Real Estate Industry has undergone significant transformations in recent years, with the introduction of transparency measures like MAHARERA. Jaatin supports such measures, stating that they have increased reliability and reduced instances of cheating, ultimately benefiting both, the industry and the customer.   Jaatin Suratwwala’s success story is an inspiration to many young entrepreneurs and those aspiring to enter the Real Estate Industry. His journey from a Metallurgical Engineer to the Founder and Chairman of Suratwwala Business Group is a testament to his perseverance and commitment. Jaatin’s advice to new entrepreneurs is to be cautious in taking risks and manage cash flow effectively. He believes that over-trading is the only chance of failure in Real Estate and advises taking only as much risk as one can handle. As he puts it, “keep your feet firmly planted on the ground, while you look towards the sky.” Jaatin advocates hard work and trust in the process, even when faced with challenges. He believes that every loss is a gain and treats all his mistakes and losses as experience points. “Every challenge is an opportunity,” he says, “and I have learned from every one of them.” For Jaatin, the core values of trust, quality, and commitment are crucial to succeeding in the Real Estate Industry. By keeping the Customer at the center of all operations and delivering on their expectations, he has gained their trust and loyalty.   In conclusion, Jaatin Suratwwala’s story is one of hard work, dedication, and a relentless pursuit of excellence. He has shown that with a strong vision and a commitment to customer satisfaction, anything is possible. As the great Martin Luther King Jr. once said, “You don’t have to see the whole staircase, just take the first step.” And Jaatin has undoubtedly taken that first step, leading his Company – Suratwwala Business Group Ltd. towards a brighter and more prosperous future.   Author Details: Mr. Jaatin Dhansukhlal Suratwwala Managing Director and Chairman  

  There is no denying the fact that Pune’s real estate market has been on the rise for the past four years. This upward trajectory has continued despite the pandemic, almost as if the pandemic never existed in the city. The city’s iconic infrastructure in the IT sector is closely interwoven with its real estate success. A healthy balance between supply and demand, often a recipe for a successful project, has clearly been working wonders for developers in Pune. But this year’s situation, unlike any other before it, caught everyone by surprise. Although much has been discussed about the affordable segment and its scalability, the average ticket size has risen to INR 59 lakhs, indicating that Pune now has wealthier home buyers. Looking back at the pandemic’s tumultuous past, the achievements in 2021 were not a big leap, but the momentum continued to improve, and CY 2022 ended with the impressive figure of INR 49,794 crore, the total value of primary units sold from January 2022 to December 2022. During the same period, a whopping 84,493 housing units were sold, representing a 26% increase over CY’19. In CY 2021, Pune sold 71,394 primary housing units, totaling a value of INR 37,520 crore. There was a 62% surge in the value of units sold compared to CY 2019. Pune sold primary housing units worth INR 67,026 crore in CY19, a time when COVID-19 did not exist. The affordable segment played a crucial role in this success, with the contribution of sales of units priced above INR 45 lakh increasing by 94% from CY 2019 to CY 2023. However, soaring sales charts are not solely due to the affordable segment. The sale of units priced above INR 1 crore saw a massive 151% increase in CY 22 compared to CY 19. Despite the RBI tweaking REPO rates six times in a row, housing affordability remains high. Pune North East was the most promising macromarket in Pune, selling 15,974 primary housing units, 52% more than in CY’19. The total value of units sold was INR 10,881 Cr in CY 22, up by 78%. Pune North West was not a new entrant in the charts and is popularly known as the most consistent macromarket in Pune. The value of units sold grew handsomely by 74% in CY 22 over CY 19, with the number of units sold also increasing by 38% over the pre-pandemic figure. Overall, Pune has a good tailwind to keep the momentum going for at least the next couple of years, with the saga expected to continue at the same pace. However, our focus should be on micro-markets like Tathwade, Punawale, and Mahalunge in the North West; Kharadi and Mundhwa in the North East; and Mohammadwadi and Hadapsar in the South East, where the average inventory overhang of seven quarters is accurately forecasted based on the current sales velocity captured in our databases. In terms of commercial office supply, Pune is just 30 msf away from achieving a golden 100 msf number in Grade A/A+ office stock (with current vacancy levels at 15.8%). Pune has already embarked on the path towards the goal, and with residential sales accelerating to never-seen-before levels, the experts will undoubtedly be on the edge of their seats for the next three years.   Mumbai Residential Market:   The year 2022 has been phenomenal for the MMR region, witnessing a record sale of housing units. With 130,259 primary housing units sold, the region peaked in sensational sales velocity. Despite being riddled with a lot of hostile elements for real estate, such as a hike in interest rates from banks, a surge in the prices of construction materials, an overshadowing recession on a global canvas, and other geo-political issues, the MMR region outperformed in every aspect. Citing this unforeseen demand, developers geared up and delivered a huge number of units to home buyers. Battling all the odds, the sale number showed great growth, driving healthy price appreciation in almost every macro-market. The majority of the launch was contributed by the western territories of the region. Here are some of the key takeaways: Housing sales witnessed a 2% decline in CY’22 compared to CY’21. But Q4 CY’22 ended on a good note, with a 21% increase in sales compared to CY’21. Vasai-Virar gets a chance to rule the top position this year, with a 24% increase in sales in CY’22 compared to CY’21, followed by Greater Thane with 23% and Central Suburbs with 18% growth, respectively. With a healthy 35% increase in the launch number of MMR this year over CY’21, Thane City at an enormous 251%, Mira Bhayandar at 59%, Panvel at 32%, and Western Suburbs at 28% concluded the CY’22 launch story when compared to CY’21. Overall, an 8% spike doesn’t seem like much when unsold inventories are being discussed, thanks to evident supply in the region, but the Eastern suburbs, Western suburbs, and Central suburbs faced a 16%, 15%, and 12% surge in the unsold inventory number, respectively. Thane City has been exceptional since unsold numbers did not budge this year. Interestingly, prices have been on an upwards trajectory in MMR, with the region clocking a 4% rise vs. CY Q4 21 prices. Vasai-Virar, Mira Bhayandar, Thane City, and Eastern Suburbs have contributed largely to this increase.   Author Name: Mr. Abhishek Kiran Gupta Business Name: CRE Matrix Designation: CEO, CRE Matrix Email: [email protected]

Navigating the Challenges of Real Estate: An Entrepreneur’s Story   All my life, growing up, I had witnessed most of my friends and family working in Real Estate in some capacity or the other. Whether it was developing, contracting or broking, I had seen it all around me since a very young age. I never had any inclination to enter this field, but life surely had other plans.  Three years ago, by sheer luck, I made my first transaction of leasing a shop, and ever since then, there has been no looking back. When I started in Real Estate, I did not realize how challenging this line of work could be for any young individual. However, throughout my journey, I also came across some very inspiring people who guided me and helped me better understand the nuances of this field. My interactions with my senior colleagues, as well as my friends and family, have taught me how to take a transaction forward with integrity while having no discrepancies with our Clients. For me, any transaction is more than a sale. It is not only about understanding the Client’s requirements, but also catering to their pace, mindset, and providing them with the best that the market can offer. Of course, I have had my share of highs and lows within this field; however, only through being in this line of work, I have learned how to be extremely patient and also when to reach out to my mentors for guidance. Now I know from my past experiences that both highs and lows are temporary, so I believe in living in the present and giving my best every day.  The pandemic changed the course of all our lives, including the nature of our work. During the pandemic, even though I was working on certain transactions, I soon realized that the market during and post-pandemic was going to take a drastic shift. Within two years, the entire course of the market had changed and as we resumed work post-pandemic, the market we all were catering to no longer existed.  Hence, I decided to launch Pratham Housing Investments, a one-stop solution for all current Real Estate requirements. At PHI, we cater to acquiring and managing property portfolios. We have done JV Transactions and outright Land Transactions where we have been by the Client’s side for over a year through the changing terms and policies made by the Government.   Nevertheless, all our past transactions have been a smooth flow throughout, and our Clients have had the utmost satisfaction after the deals concluded. We not only have got our transaction fees but also have been awarded the Projects for Sole Selling, and that’s one example of our foundation of relationships with our Clients.   Author details:   Mr. Yash Bhatia  Founder of Pratham Housing Investments  www.prathamhousing.com