Not everyone has what it takes to plan and undertake a successful property development business. From novice developers to seasoned practitioners, there’s a lot to learn from the way ATS works.
A property development project is almost always a serious undertaking and not one to be faced unprepared. And if it’s done right, the rewards can be excellent. Especially in today’s economy, a project requires vision, commitment and funding to make it off the ground. Check out Noida-based ATS Infrastructure. How many developers have actually handed over so many projects in the last five years in Delhi NCR as ATS? Unlike other developers who would buy a plot and start building to abandon the project midway for lack of funds, most of ATS projects are funded through the special purpose vehicle route. HDFC Asset Management and ICICI Prudential are among the fund partners in ATS projects. ATS has also been able to attract FDI from leading players such as IL&FS. Private equity firm ASK Property Investment Advisors Pvt Ltd has invested Rs 147 crore in a residential project to be developed by ATS on the Dwarka Expressway. In fact, ASK invested in the Dwarka project at the land acquisition stage. ICICI Prudential AMC has also invested an undisclosed amount in the two Gurgaon projects of ATS. Earlier, ASK put in Rs 50 crore in 2010 in ATS One Hamlet project (Sector-104, Noida) in 2010and exited two years later with returns of 2.5 times. Milestone Capital also put Rs 100 crore in ATS Dolce, Greater Noida. In July 2014, ASK also invested Rs 127 crore in ATS Pristine, Sector-150, Noida Expressway. So that’s the reason while most developers are waiting for Achche Din to uplift a near dead market, all ATS projects under construction are actually getting built, including Allure on Yamuna Expressway. Also, once the project starts getting built on the strength of initial fund push from PE or whatever source the developer manages, it becomes easier to get investors and subsequently, buyers. Hesitant to invest their hard-earned money at the pre-launch stage of a project, the buyers are now willing to dig deeper into their pockets to pay much more than the initial offering. So even if the PE fund exits after making good profit, the buyers and investors keep the project alive.
SMART SYNDICATION: Though the promoters would like us to believe it’s due to new levels of professionalism, integrity, customer focus, and an uncompromising approach to quality, we say it’s dues to smart syndication on part of ATS. Real estate deals typically involve a sophisticated financing structure, including both debt and equity capital. The different types of capital are arranged in what’s called the capital stack -- a structure which dictates the order of claims to investment returns. Depending on project specifics, a developer may syndicate a portion of the capital stack. Syndication -- which has been around for decades -- is a pre-cursor to crowdfunding. It's a defined process whereby developers divvy up some of the equity among a group of investors, often high-net-worth individuals in their network. Right up front, investors are informed about the investment terms, project timeline and return projections. The organized nature of syndication makes it easier for developers to raise funds efficiently. Without a similar framework, a business's efforts to pursue capital can be haphazard. Often, they fail to close investors because they don’t have -- or don’t communicate -- a compelling exit strategy.
SMART SYNDICATION: Though the promoters would like us to believe it’s due to new levels of professionalism, integrity, customer focus, and an uncompromising approach to quality, we say it’s dues to smart syndication on part of ATS. Real estate deals typically involve a sophisticated financing structure, including both debt and equity capital. The different types of capital are arranged in what’s called the capital stack -- a structure which dictates the order of claims to investment returns. Depending on project specifics, a developer may syndicate a portion of the capital stack. Syndication -- which has been around for decades -- is a pre-cursor to crowdfunding. It's a defined process whereby developers divvy up some of the equity among a group of investors, often high-net-worth individuals in their network. Right up front, investors are informed about the investment terms, project timeline and return projections. The organized nature of syndication makes it easier for developers to raise funds efficiently. Without a similar framework, a business's efforts to pursue capital can be haphazard. Often, they fail to close investors because they don’t have -- or don’t communicate -- a compelling exit strategy.
THE REPUTATION GAME: No one can deny the importance of reputation in real estate. No wonder successful developers are adept at converting personal colleagues into investors. That’s partly because they emphasize ROI, but also because they know that investing isn’t just about making money: It’s about backing someone you trust. Developers build reputations over time as they complete projects. Investors care about what a developer has accomplished, who his partners are and how his investors fared in the past. Unless you back up your pitch with past performance, new audiences will be hesitant to invest in you. That’s why it’s crucial to keep your network informed, engaged and motivated to be part of your success.
BUILDING RELATIONSHIPS: Relationships are an absolute must, and they take time to develop. A developer must have relationships with bankers, attorneys, equity sources, general contractors, civil engineers, architects, brokers and others. Once they come to trust you, these lenders can give you swift, personalized service at competitive rates. As we all know, most developers never get their hands dirty, and are more like a producer of a movie. They bring a successful team together to create a successful project and it takes amazing relationships to pull it off. In its journey to deliver some of the better built homes in this part of the world, ATS has associated with known talent in the industry like renowned architects Hafeez Contractor and Oru Bose of Bose International. Such relationships with construction professionals ensure that you can rely on them for timely and quality work in the future.
DO CREATIVE WORK: Every development project starts with an idea, either for a particular use on a site or a vision for what a community might need. Developers are creative individuals who seem to always be looking ahead at what demand might exist in the future. Successful developers push the envelope with exciting designs, new building materials and cutting-edge construction methods. Each of the ATS developments, including ATS Village at Sector-93, Noida, Paradiso at Greater Noida, or One Hamlet at Sector-104, Noida, is remarkable for better use of space, landscaping, comfort and construction quality.
PROBLEM SOLVING: Developing a successful project takes tremendous skill to navigate through all the speed bumps and roadblocks along the way. Developers like ATS know how to solve problems, and they seem to understand that there is usually more than one solution to a problem. Creative site planning, finding solutions to zoning issues, dealing with adjacent land owners and finding ways to come in both on time and under budget are all examples of the problem-solving skills a developer must have.
REINVEST IN YOUR BUSINESS: Another lesson that ATS can teach its contemporaries is that instead of spending early gains on personal consumption, they need to put gains back into real estate to make way for explosive business growth.
No comments:
Post a Comment