Nearly four years back when the real estate market was at its peak all the developers tried to diversify into other greener pastures. However, in their quest to diversify and route the funds into other greener pastures most of them burnt their fingers following the market slowdown. Now the trend seems to have reversed at least among the realtors in South India.
The otherwise over cautious real estate companies in South India are slowly entering the infrastructure segment by setting up subsidiaries to cash in on the emerging opportunities in this space.
Presently, most of these subsidiaries handle the EPC (engineering, procurement and construction) work of their parent companies and are building capacity by hiring professionals even as they are forming separate teams to take care of their future assignments.
Bangalore-headquartered, Brigade Enterprises has recently floated a subsidiary, Brigade Power and Infrastructure Ltd to enter into the infrastructure sector. This infra entity would concentrate on power and road projects within the infra vertical, he added. He, however, declined to give a time frame for bidding for new projects under the road and power verticals.
Similarly, Puravankara Projects has a wholly-owned subsidiary namely Starworth Infrastructure to bid for infrastructure projects. “We have entered the infrastructure space as we see a lot of value in this sector in the coming times. Presently, our infra wing helps us to manage a lot of backend work,” Ravi Puravankara, chairman of Puravankara Projects, said. He also said the company was building capacity to bid for infra projects in the near future. “Rural infrastructure like roads and bridges are pretty much in our radar for which Starworth will bid in future,” he added.
Talking of the rationale behind the realtors foray into the infrastructure space, experts believe with the kind of infrastructure spending proposed over the next decade, there are ample of opportunities that will come our way. Also, there are a lot of operational synergies.
India is expected to spend around $1 trillion on infrastructure during the 12th Five Year Plan (2012-17) which is likely to open up numerous opportunities for private players under the public-private partnership model.
Some of the industry watchers feel that the higher capital expenditure is holding back many developers from entering this space.
