Homestead to score in real estate market via Sri Lanka Cricket

By Cassandra Mascarenhas

To improve visibility and build a reputation for itself within the subcontinent, UK based private equity firm Homestead Development Corporation has leveraged the ongoing T20 World Cup to enter Sri Lanka’s real estate market.

They have come onboard by signing an agreement with Sri Lanka Cricket, making the company official corporate partner of the Sri Lankan cricket team for the ongoing tournament as well as for those that will be held over the next six years.

With a mandate to invest in South Asia, namely India, Sri Lanka and Bangladesh, Homestead which has already established itself in India within the course of a year, brought forward its plans to commence operations in Sri Lanka by an entire year in order to build on the opportunity given by the World Cup.

“We see Sri Lanka as a very attractive destination for the future and this is the time to get in and acquire some good lands. The Sri Lankan market is still in a very nascent stage of development but the good thing about the country is that it has got its basics right. We are still in the very initial stages in Sri Lanka and have signed a MoU with a local company,” stated Homestead Asia Pacific CEO Manoj Shrivastava.

He explained that company as a company policy uses sports as an endorsement partner which helps them connect with markets and also allows them to deliver a very good message and that this is an excellent time for the company to create a brand presence for itself via SLC.

Land of opportunity

 “South Asia is the land of opportunity. If you scan the world, South Asia, Latin America and in the about five years down the line, Africa will be the growth areas of the world and the areas are still on the path of maturity so the returns are very high,” he added.

“India was a very normal choice to be in real estate because of the return on investment which varies from 28 per cent to 50 per cent in the real estate market. Latin America and Russia is now catching up to this.”

Furthermore, India is one of the biggest consumer markets in the world. The company felt that Sri Lanka, Bangladesh and India together would make a very good team and would be easy to operate in. Shrivastava admitted that it was a natural choice to work in these three countries together, although the horizons and investment sizes may differ within the three countries.

“Sri Lanka today is as good as India in the 90s, it is opening up to the world and people see it as a very good opportunity so we want to be here and while we won’t embark on any projects in the near future, we are here to understand the local dynamics and ascertain how to conduct business,” he said.

Long term venture

Shrivastava observed that there are plenty of things that they have done in the Indian markets that they would like to duplicate here. He also pointed out that there is a need for international expertise, labour, real estate work, exposure, concepts and technology in Sri Lanka that Homestead can bring. “Especially with a large economy like India next door, we can be benefitted by the work we have already done in India.”

He was quick to add that some parameters in the country will definitely be distinct and different from India despite many other similarities and so the company is still learning and understanding the opportunities. “We are here for a long term venture – we are looking at it as a developing economy that will mature over the next 15 to 20 years,” he stated positively.

He also pointed out the need for the Sri Lankan construction industry to grow in terms of per capita income and the current growth rates, especially after such a long war. Real estate and housing is something that is important to every habitat, it’s a basic need.

“We as a company also have different levels of products – we have affordable products, luxury products, super-luxury products and our aspirational products. We have chosen to come into Sri Lanka with our aspirational product because that gives us bigger visibility but eventually we will be doing housing as that is where our expertise lies,” Shrivastava said.

Plans for investment

Homestead has identified certain parcels of land and is exploring the business opportunities and hopes to have a better idea of their future plans within the next six months.

Studying the developments that have been happening in the country since of late, Shrivastava noted that while city redevelopment in Colombo may not be possible, there certainly is potential for satellite towns around Colombo for which plans can be drawn up from scratch. Within the city, they may opt for high-rise developments.

He added that going forward, Homestead will look into capitalising on many opportunities and may even consider investing in small high-end boutique hotels in the country as well as try and make up for the lack of good office infrastructure.

“We have different models in which we operate and one of those is the asset management model which we can start working on immediately – it is a consultancy based model and we are looking at that opportunity because that will help us establish our base here and in the meantime, we can do an investment study.”

Understanding how cricket is followed in the subcontinent, the company felt that the T20 World Cup would act as the perfect opportunity to establish itself in Sri Lanka. It was also a very good opportunity to work with an organisation like Sri Lanka Cricket and use the home advantage that the Sri Lankan cricket team enjoys to their benefit. “We thought it would be a very strategic and far-reaching idea to follow cricket and enter Sri Lanka.”

Creating an aspirational product

Homestead as a real estate firm has a vision to create different ideas in real estate – it’s not only about making homes but it’s about making homes differently in terms of aspirations of individuals who live there and one way they have done this is by creating the concept of ‘branded apartments.’

For example, one product they have undertaken in India is the Michael Schumacher tower which Michael Schumacher himself has endorsed, a property that will carry Michael Schumacher’s name forever. Once complete, not only will it have residences to live in but will also double as a resort with clubs and swimming pools.

The interiors are being done through Schumacher’s nominated fashion designer so his taste will be reflected in the common areas such as the lobbies as well in the clubs and other lounges.

“In fact, the product when it was made was inspired by the Monaco F1 track as it was the most memorable F1 track for Schumacher and the model has been designed after that. People talk about 21st century living, we talk about 22nd century living. We go a step ahead and go on to talking about something that is yet to come, to plan something that is yet to come.”

Aspirational products are very limited in number and the Michael Schumacher tower which is located in Delhi will consist of only 90 apartments and the tower itself will be an iconic landmark and is the tallest tower in the vicinity. Only 90 out of around 20 million people can have the product making it all the more exclusive.

While on a mass scale, Homestead’s real estate consists of affordable products, the company has also created a niche for itself – one of aspirational living. Yet another product they hope to launch in November in India is the Maria Sharapova product. Sports noticeably plays a key role in all the company’s operations and ventures.