Hubtown Limited: Building India’s growth story, brick by brick

India has witnessed a surge of 38 per cent in real estate registrations in the first quarter of this year. In fact, the real estate sector is a big contributor to the overall growth story of the nation at large as owners of all categories of housing are demanding luxury homes, regardless of the size or location of the unit, which were traditionally considered as more important factors.

In an exclusive conversation with Livemint on the sidelines of the Mint India Investment Summit and Awards, Vyomesh Shah, Managing Director and Co-Founder, Hubtown Limited shared his thoughts about the future of the real estate industry, the new trends that are emerging in this space and how an Indianbuilder can stay ahead of the curve.

Some edited excerpts:

Q. You have been associated with the real estate industry for four decades. Was this four-decade relationship that you have with real estate love at first sight? Or is there another story?

Vyomesh Shah: I am a Chartered Accountant by qualification and I was practising as a CA till 1985. My brother is a civil engineer, so the real estate and construction business was a natural fit for our qualifications and experience. Initially, we took up a lot of contracting projects, but then in 1988, we saw an opportunity in real estate, which was not professionally run nor managed, and we grabbed that opportunity. That is how the shift happened. The journey started with the slum rehabilitation scheme, which nobody was doing in 1995. A lot of slum development schemes were initiated in the past but they never actually took off.

We shifted our focus to some slum redevelopment from contracting and we started mobilising hundreds of slum dwellers to join the slum redevelopment scheme. Slowly, we had a lot of slum dwellers joining us. To date, we have handed over more than 20,000 houses free of cost to slum dwellers. We are the pioneers in the slum redevelopment scheme, and we had the first successfully completed private slum redevelopment scheme in Mumbai in Dharavi. Then, we shifted to urban renewal schemes also, PPP projects, and society redevelopments. Now, our land bank is a mix of all these schemes as well as freehold land parcels.

Q. In Q1, we’ve seen a surge of 38 per cent in registrations. How do you see industry leaders capitalise on this sudden surge of growth and how do you think this matters, especially considering the variability of affordability in the city?

Vyomesh Shah: This has been happening since 2019. Unfortunately, about one year got lost to COVID. However, the recovery of course came extremely quickly, with low interest costs, changing psychology of buyers, willingness to utilize wealth to buy larger houses, and of course structural changes in the real estate sector (the most important of which is the introduction of RERA). With high customer confidence, the upcycle has not stopped and looks like it will continue to go strong in the near term. Furthermore, the amount of money that was being pumped into infrastructure by the governments all across this country. If you really see the growth of Europe, the USA, Japan, and other Western countries, they have grown only when money was pumped into infrastructure.

But, considering the amount of investment that went in from 2014, the multiplier effect had to come after 6-7 years. It should have started in 2020, but it got delayed because of Covid. From 2023, I see the same story going on till 2029-30.

Q. When you look at pure numbers, it is very clear that India’s real estate market has some catching up to do. While China delivered 1.1 crore houses this year, India has delivered only about 6,00,000 houses, which is less than one-tenth of China's number. What do you think are the likely factors that are contributing to the disparity?

Vyomesh Shah: We must not get carried away by the China story. China is currently suffering heavily because of the real estate bubble and several big companies are going bankrupt. Our country is a democracy, a free market, and considering that the risk and reward is of a private individual, we cannot follow or compare with China.

Q. What do you think is the role of the real estate sector in nation building in India?

Vyomesh Shah: The real estate sector plays a major role because it provides one of the most important needs of people’s lives – a house. In India, there is substantial demand for housing in all price brackets and for all sections of society. Furthermore, it provides maximum employment and gives a boost to several other industries as well. Real estate investments never saturate. So, while both are moving together today, slowly the growth story will have more real estate taking over the infrastructure investments. Real estate can never be ignored or have a less important role in the economic development of our country.

Q. Urbanisation has grown from 31 per cent in 2011 to 40 per cent in 2024 with nearly 600 million people living in Indian cities and towns now. Do you think that Indian cities are currently built to accommodate this kind of influx?

Vyomesh Shah: If you concentrate and develop, infrastructure development is required in a concentrated area, but if you spread wide and develop, infrastructure expenses increase because its reach needs to be widespread. We should reach a level where infrastructure growth should be ahead of population growth. We are ignoring all this. But, we have not reached that level economically. In Mumbai, population growth has been exponential over the past 40 years. We are a little behind in planning but we are catching up.

What we need is to create development plans which are futuristic. Instead of the next 15 years, they should look at the next 60 years. Barcelona is a classic example. The central road of Barcelona is 300 feet and it was planned in 1700 when the population was nothing.

Q. How do you think the industry can strike a balance between luxury living and between this varying spectrum of affordability depending on location in a city?

Vyomesh Shah: All homebuying is luxury, and the mindset of “luxury” and “quality” has to be in all homes, irrespective of the price of the home. Most people are able to buy one house in their lifetime and want to have the best of everything. For a real estate developer, implementing luxury is not much compared to the sale price in a market like Mumbai, and we try to give the best quality irrespective of location, size of the house, or the sale price. I think going forward, at least in Mumbai, the market will catch up to this mindset.

Q. Is this demand for luxury real estate here to stay? What do you think is the role of both the builder and the buyer in bringing this luxury living to the end user?

Vyomesh Shah: The demand for housing is rising because of economic growth. At Hubtown, we are also constructing this luxury four-bedroom apartment of 3,000-5,000 square feet. We are also constructing 320 square feet of two BHK apartments with two bathrooms with full luxury – it has the same gym and the same facilities. It’s affordable even at a location like Worli where we are selling a 320 square feet two BHK at ₹1.80 crore while another two bedroom apartment will never be available for less than ₹8-12 crore. This has been made possible because of the size and the compact design. But, it comes with the same luxury of finishes.

Q. How do you see the role of payment plans in the real estate sector as going from just smoothing out transactions to actually building a lot of trust and satisfaction between a buyer and the builder?

Vyomesh Shah: This was true maybe before RERA came that payment plans helped to build trust. I strongly believe as a philosophy that we are not in the business of financing. Real estate is a business which is for constructing houses and selling them. Any developer who is indulging in a payment plan by itself may run into a big problem later. Those are the developers the buyer should not trust because he is trying to push you to buy on the basis of a payment plan and not on the basis of his past track record or not on the basis of his delivery schedule. NBFCs and finance companies have to take up the role of financing. So, it is always better to go for a developer who is not in a funding business because that is not his core business.

Q. Recently, at the Mint India Investment Summit, when the subject of SEBI’s recent regulation on REITs came up, you sounded very positive and very excited. How do you think this development is going to boost investor confidence and change the landscape and the future of real estate in India?

Vyomesh Shah: Real estate as part of an investment portfolio for anybody has been a challenging investment over the last decade (barring the last 2-3 years). Shares have been good, gold has been good, and these investment opportunities were available to even those with ₹1 lakh or ₹5 lakh in savings. Real estate is included in the portfolio as a bifurcation of risk. But, there is no way to put a small ticket size in real estate unless you invest in REITs. Now, we will have REITs arising out of both commercial and residential premises. The State laws still have to change – the stamp duty law needs to also be changed simultaneously, and rental laws also need to change.

Q. As a pioneer of SRA and urban renewal schemes, you would have invested so much of this lifetime into helping others and this nation grow. But what do you do when you're not working?

Vyomesh Shah: I enjoy my life thoroughly. I’m a workaholic, no doubt about it. But simultaneously, I enjoy singing classical and pop music, reading about religion and traveling with my friends.

Disclaimer: This article has been produced on behalf of the brand by HT Brand Studio.