Mr. Rajesh Jaggi, Real Estate, Subject Matter Expert

by ckasundra | Jun 15, 2017
Mr. Rajesh Jaggi, Real Estate, Subject Matter Expert

This January, we’ve decided to start the year with a bang! PeriGrow has initiated a series of #LeaderSpeak wherein we seek guidance from Subject Matter Experts to help our clients make decisions that will not only cause a positive ripple effect in their companies but also minimize their risk factor. After all, #UCANPeriGrow only with the real experts.

Today, we speak with Mr. Rajesh Jaggi, Managing Partner, Real Estate, at Everstone Capital Advisors to shed some light on burning issues faced by developers and builders in India. We are proud to be associated with Mr. Jaggi since 2006 and have since then interacted with his group which focuses on four real estate private equity funds with a total AUM of over USD 1 billion; broadly focussed on Retail and retail led mixed-use developments and Industrial & logistics parks.

PeriGrow’s list of clients includes India’s top real estate developers concurring with Mr. Jaggi’s point of view, i.e. real estate builders and those in the construction sector must focus on Transparency; Strong compliance and governance; Track record of timely delivery of projects; Customer focus and better quality; and lastly, Prudent financial management. Further, in the conversation, we get down to details. Here are excerpts from our working lunch before Mr. Jaggi heads out for the holidays:

What type of housing will see a fast growth in Mumbai?

How should real estate companies manage risk in 2015?

  • Regularly service/reduce debt levels
  • Acquire land parcels at “correct prices”
  • Effectively manage regulatory risks
  • Inventory management

How should construction companies look at acquiring loans In the following order of decreasing priority:

  • Commercial Mortgage-Backed Security
  • PSU banks
  • Private banks
  • NBFCs and Structured Debt Funds
  • Private loans from HNIs

Could you shed some light on onshore and offshore funds in this sector
Generally speaking, the two can be segregated under the following parameters:

  • Fund size: On-shore funds are limited in terms of fund size with a typical AUM in the range of Rs.100-500 crore while off-shore funds are typically larger with an AUM of up to USD 500+ million
  • Customer profile: On-shore funds count domestic institutions, PSU banks and mostly HNIs as their core customer base while off-shore funds are funded by large foreign institutions such as pension funds, sovereign funds and college endowments along with global family offices
  • Risk appetite: Investor risk appetite in off-shore fund may be termed as muted, as customers seek long-term investments with limited risk, geared towards capital preservation. On-shore fund investors expect significantly higher returns with a higher risk appetite to match
  • Flexibility: On-shore funds enjoy more flexibility in terms of investment/project specifications as these funds are not guided by FDI regulations. On the other hand, off-shore funds are guided by FDI norms, which should see some relief under Press Note 10 of 2014

Please give your one line thoughts on the following:

  • Residential Construction – Large and profitable space with real unmet demand
  • Affordable Housing – There is genuine demand in this space, however, successful implementation requires an appropriate business model and to acquire land at the right price points
  • Warehouse – Very fast growing and under supplied market
  • Commercial – Office demand is mixed with tenants gravitating towards certain “Grade A” projects only. Retail sector is oversupplied in certain micro-markets and stressed with several malls suffering from low occupancy levels and cash flow issues
  • Plotted Development – Very niche space and limited demand. But emerging growth area, which could benefit from relaxation in FDI regulations under Press Note 10 of 2014
  • Lessons learned in real estate sector in 2014 – Prudent risk and financial management are key to players in this sector
  • Real estate trends in 2015 – Consolidation and hope for the market to pick up
  • Pricing strategy for real estate developers – Market driven with an eye on liquidity

Everstone’s USP as a real estate Fund includes end-to-end ownership of the development life cycle beginning – all the way from land acquisition to construction to leasing & sales to facility management to exit (liquidation of investments).
For more information, please contact aspire@perigrow.com or phone: +91 22 6117 4910.