Mr. Jitu Virwani, CMD of the Embassy Group takes part in the NDTV Prime Realty Debate on Bangalore’s robust property market. Top 5 property developers in Bangalore touch up on topics like property price trends, demand and supply situation, affordable vs luxury market, project pre-launches and REIT. According to the group, home prices in Bangalore are more stable and better priced and developers more responsible when compared to other Indian cities.

1. Jitu Virwani speaks on NDTV Prime
Watch video: https://www.youtube.com/watch?v=9BWBQNuMZ0o
Video Transcript
Welcome everyone to our Realty debate on Bangalore’s Property Market. 4OO out of world’s 500 - Fortune
500 companies is based out of Bangalore. The income of Bangalore is estimated to be 70 percent higher than
the national average, so it is clearly a market to be observed and to keep a close tab on. Today we will get
you the reality of Bangalore’s Real Estate Market. What is the price trends, what is the demand and supply
situation, is Bangalore turning more into a luxury market than an affordable one? To talk on all of that, I
have with me Bangalore’s top 5 developers who redefine the city’s skyline.
Jitu Virwani, CMD, Embassy Group
MN:Let me start with a curious observation and a good one too. The most glamorous hoardings from the
airport to the UB City are all or atleast 2/3 from real estate companies. The market seems to be looking very
robust. The first 6 months, there haven’t been many new launches. Were things looking a little slow before 6
months? Do you agree with that? As in old projects weren’t selling as much as the newly launched ones. Was
it the rational pricing? In all of India there was a certain amount of distress in the real estate market. Didn’t
that bother the developers?
Jitu Virwani: The whole important thing is that in Bangalore over the years we have had only genuine buyers.
We don’t get people or I don’t think any of us get people who buy a tower of residential buildings from us
and then try to resell it, or buy a few floors. They are mostly genuine buyers and like Irfaan correctly said
people want to pay over a time because they are buying it for their own use, we Indians like to save a lot, so
you buy an apartment for your daughter, then you buy for your son, then you buy a second apartment for
your daughter when you have some more money. People like to pay in installment. Also the crux is that the
last part of the market is this mid-segment, which is in Bangalore rightfully. I don’t think that we have some
sort of a cartel, but by default we price our products much better than everybody else in the country. Its not
highly priced, or as the market moves up, the prices don’t go up in Bangalore so fast as it goes up in other
parts and then it slows down.I think that also plays an important role, because Bangalore is a stable market.
MN:On the move by RBI to cap affordable budget homes in the 50-65 lakhs range. Is this a positive move.

2. Jitu Virwani: The pricing of the luxury segment homes in Bangalore is at a mediocre level than some of the
cities and everyone of us has a threshold of how much luxury can we sell.
MN: 4.2 Crores is luxury in any city Mr Virwani!
Jitu Virwani: But if you look in cities like Delhi, or 4.2 crores in Bombay, that kind of a flat people just need to
buy, the buying capacity is much better.
MN:Give us some growth corridors, what are the growth corridors for mid-segment budget homes? Is 35 kms
from the city center good connectivity areas, what do you think Mr.Virwani?
Jitu Virwani:I think in Bangalore, there are smaller cities, so everywhere you put a market, there is strong
growth.
MN:Are the pricing in budget segment in Bangalore set to grow 10-15 percent in the future as well? And
what about the luxury segment, where is it set to go? June has seen a big spurt in the growth in the luxury
market.
Jitu Virwani:The luxury market is quite strange. It all depends on the quality of development you do. The
people with that size of money who are willing to buy are mostly in Bangalore because the standard of
development is pretty high and people’s expectations are quite high in terms of quality product. They are
willing to pay a price if the location is good and again as I mentioned earlier, luckily most of us have
controlled the price rise in the luxury segment in a very slow and gradual manner, so you know we would
rather sell 200 apartments than sell 20 apartments and jack up the price to a very high level which becomes
unreachable as it happens in most cities.
MN:About the Office Parks space, what is it that attracts Corporates to Bangalore real estate? Is it the quality
of the space offered and how much more attraction of this sort will you see? What is the outlook on
Bangalore’s office space? Office space figures,if you look in the first quarter in 2014, absorption of office
space in the Bangalore market has gone up by 100 percent when compared to 2013. How long will these
astounding figures continue. Jitu Virwani could you please start with the office space market and tell me
what’s been going on?
Jitu Virwani:If you go to the starting of the software movement which began in Bangalore and typically the
availability of the quality engineers in Bangalore is much higher, though even they come from all parts of
India. If I lived in Patna, and I got a job in Bangalore, I would love to come and live in Bangalore because I
already have a lot of friends here and the attrition rate over here to go around looking for more companies to
move around is much higher here. There are more companies here, there are more opportunities, white
collared jobs here are more stable and the number of engineers here are quite high so that's why there is a
growth in the housing market also. Companies find it very easy to expand in Bangalore for their new
businesses and to get good people.
MN:Are you happy with the increase in the rental lease that you have seen?
Jitu Virwani: Obviously not, we want more! But the one good thing about Bangalore has been that the
Software market is related to the timely completion, hand over, occupancy, power, water which I think to
some extent is quite efficient in Bangalore, so you can time it. If I were to go and build a building in some
other city, I would be wary of getting my building or product ready and I will have to face penalty from these
companies. That has made lot of these companies come back to Bangalore, where developers can promise a
schedule and stick to their schedules and deliver buildings on time.
And again the attraction about the weather here. For love or money you can’t get the kind of weather you
get in Bangalore in any other parts of the country!
MN:Will there be a time when the pricing increase will make it an expensive market or is that quite far away?
And on the trend for MN Cs to buy office space instead of leasing?
Jitu Virwani: They have been in the country long and they are comfortable,they have the confidence in the
city of Bangalore. The Accounting system in the US has changed. You see, rent has to be now capitalized.

3. Earlier they had this system of expenditure and revenue. But now they think that might as well in the long
term buy and hold it. So you know, you need to as a developer be flexible, some of us love renting, some of
us love selling and then you have a combination. Bangalore has both a rental and a logistical advantage.
MN:Next about REIT, excited about it? Embassy and Blackstone, is something that everyone is speculating it
will happen. Will we see the first REIT in Embassy and Blackstone? Its a pointed question though!
Jitu Virwani: I am also there in it and I am always excited. REIT is something that we as a company have
been attempting. Of course you will all want to know of the first deal, in terms of value, we will also benefit
in being the first REIT. And our aim will also be to do that, but from 2007 as a company we have been
looking at a REIT, whether it was in Singapore and hoping that some regulations would come up in India. And
about 2 years back we decided that India would be the right place to actually do the REIT than rather go to
Singapore, and there is enough money within the market, there is no exchange risk. And the only benefit you
get in Singapore is the arbitration of borrowing, but this will be a much safer growth, much safer market to
be in. And it looks like the government is moving quite fast at this pace.
MN:What are the kind of REIT yields we are looking at? Isn’t 9 to 10 percent quite low?
Jitu Virwani:And going forward think of the growth plan. The growth on it. 9 to 10 percent is a good yield to
start of with, then the escalation kicks off. Then there are location changes, Many of us have locations where
we have tenants paying rent, another tenant paying literally 30, 40 or 50 percent, sometimes even 80
percent more rent, and in a span of 5 to 6 years, a new tenant. There is a lot of growth which will play an
important role in that kind of thing.
MN: So you think REIT will work as a product in India?
Jitu Virwani: Undoubtedly. If somebody like you wants to invest, its a hedge against inflation. You can’t get a
piece of action or real estate growth in India on a small piece of land otherwise.
MN:Because Bangalore is growing all around leaving aside the West part, Is land going to be an issue for
your growth plans Mr.Virwani?
Land is certainly not going to be an issue, as there is lot of land available and infrastructure is also growing,
like every city in India, it needs development and we are hoping this government can help us, since they got
majority power. Also if you look back the years, Bangalore Developers about 15 -20 years back on wards in
their small way have taken the responsibility of developing certain roads, maintaining certain roads. They
have the ability to spend on the place. And in a lot of other cities developers say it is the government’s job.
Unlike that, in Bangalore a lot of developers have build the infrastructure without batting an eyelid, because
they think it is convenient for them and their people. So people are spending crores of rupees doing it. I
mean in our whole credal, many spend so much to improve accessibility, be it me or Jaishankar or Irfaan.
There was this survey some time back that said an average Bangalorean is ready to pay more taxes to get a
good quality of life, and better quality of transport.