Under the new business model the firm has signed four joint development projects in Mumbai and Bengaluru totalling 4 million square feet to expand its portfolio.
“The terms for JDs (joint developments) are more favourable in the current market. Earlier we would buy large land parcels of 50 acres and build large projects, but now the focus is on smaller projects with quick turnaround,” said managing director Ram Walase.
In the past few years, the Jerry Rao-backed developer has shifted its focus from low-cost homes to mid-income housing projects. Now it plans to build homes with an average price of ?4,500 per sq ft, as against ?1,600 per sq ft earlier. “There is customer appetite to buy mid-income homes and not invest in big projects,” said Walase.
VBHC Value Homes, which deferred its plan to go public, is in the process of raising ?100 crore equity to fund the projects. “We are raising this capital from existing and new investors to fund the projects,” said Walase. The company had earlier said it would raise ?1,000 crore through an initial public offering in 2019 to fund its growth. Co-founded by Rao and PS Jayakumar, the company is backed by a number of investors such as Japanese real estate conglomerate Daiwa House, International Finance Corporation, Tano Capital and HDFC Bank. Rao holds 48% stake in the project and 6% is held by Kumar while the remaining stake is held by institutional investors.
The mid-income segment is increasingly becoming an important constituent in the portfolios of most developers across the country. The government’s thrust on affordable housing to achieve its objective of ‘Housing for All’ by 2022 has seen developers focusing on this segment.