Born as an exporter of sun dried shrimps to Burma in 1894, ABAD Group enjoys leading presence in the business and industrial landscape of Kerala. Presently, the Group is engaged in a diversified range of business activities that encompasses construction (ABAD builders), seafood processing (ABAD seafood division) and hospitality services (ABAD group of hotels). Dr Najeeb Zackeria, managing director, ABAD builders, speaks to IndiaRetailing about the business plans, turmoil in the property market and the future roadmap. Excerpts.
IndiaRetailing: Further fall in rental prices is expected. Interest rates have come down for the borrowers. How will it impact the real estate sales?
Najeeb Zackeria: In view of the global economic meltdown, most of the business sectors in India have been affected to varying degrees, specially in the last quarter of 2008. Decline in real estate development and retail growth calls for rationalisation of all cost parameters involved in the development of quality real estate space including retail.
The availability of lower cost of funds from banks and easier dispersion of the same for meeting working capital requirement would ease the pressure of both the developers and retailers alike. The lowering of interest rates has helped stimulate the market and increased the customer confidence helping in creating a positive outlook on the sector. Further impetus would be genuinely helpful to kick start and maintain the growth of the economy. Rentals which are too high and unviable in the present market condition may be renegotiated or leases could be terminated to control costs. However, wherever retail operations are well off and rentals reasonable, they would continue to make steady progress, though at a lower growth rate.
IR: Real estate sector is a vital driver of growth of retail sector. Your comments.
NZ: Undoubtedly. Real estate sector has a significant role to play in the growth and development of the organised retail sector. Even now, organised retail contributes to less than 5 per cent of the total retail space. So qualitative and affordable real estate development encompassing all categories of development including residential, commercial, hospitality, warehousing, industrial and manufacturing disciplines would all play a contributory role to the evolution of the retail sector.
IR: Leading builders are developing townships across the country supported by the government. How will it boost the industry?
NZ: A township involves a different and highly complex paradigm of development with a great deal of integration and planning with enormous challenges. For a successful township development which could take anywhere between 5 to 10 years, the local governments approval and facilitation is a vital and integral part in the overall scheme of events and in the creation of supporting infrastructure. As this would be a catalyst for further integrated development of newer areas with enormous employment opportunities as well. Further, it will act as a multiplier effect on the economy and would give a tremendous thrust to the development of rural India.
IR: While most of the real estate developers are reportedly struggling to get 100 per cent occupancy of there ready-properties, how is Abad Builders placed with this situation?
NZ: In our case, while ready to occupy residential properties are practically fully sold, the actual occupancy in these properties varies between 50 to 75 per cent depending on actual users, rental demand and business growth in Kochi. As such, there are many upcoming Central and state government mega projects which would be completed within the next two years. This should spurt the demand further for rental accommodation, office space requirements and quality retail space by the last quarter of 2009.
IR: Which are the projects in the pipeline?
NZ: Having handed over 18 projects with over 2 million square feet development by end of 2008, we are now having close to another 2 million square feet in various stages of development in Kochi. Of the many projects include NUCLEUS- a mall and office arcade of over 2 lakh square feet on NH 49 at Maradu, Kochi which is expected to be completed by September 2009. Another development is Platinum Heights- a 31 storey, 350 units premium residential project in Emirates City, Ajman, UAE which is expected to be completed by June 2011.
IR: ABAD builders has a strong presence in Kerala. Any plans to extend to other states in India?
NZ: ABAD Group has created a niche for itself in seafood exports, hospitality and real estate development in Kerala. Among the largest seafood exporters from the country and an extensive cold storage chain, the seafood division established in 1931 has also presence in Chennai, Vizag, and Dubai apart from many locations in Kerala. The real estate division is primarily focused in Kochi since the last decade and is expected to maintain a steady growth in the Kochi real estate market. There are no immediate plans to start operations in other states in the present market situation.
