Indo-Japanese real estate venture
20 Nov 2020Krisumi, a 50:50 joint venture between Japan's Fortune 500 company Sumitomo Corporation, and the Krishna Group in India is currently developing a 30-acre project of its 65-acre land parcel in Gurgaon. The first phase comprising 433 units, including a 36,000 sq ft clubhouse, is expected to be delivered by 2024, the company’s co-CEO and director, Takahiro Yamazaki told Moneycontrol.
The company has so far launched three towers – A, B and C. While the first two towers were launched earlier, the third tower was launched during the pandemic.
“While Towers A and B comprise 239 units, Tower C will consist of 194 units spread across 34 floors of which the top six floors would be reserved for limited edition fully-furnished apartments targeted specifically towards the expatriate community,” he said, adding construction on all three towers is in full swing.
The limited-edition fully-furnished units will provide services that expatriates look for. “We are hoping to cater to a huge demand for an expat specific product that does not exist in the market so far. Our target audience is expected to be senior management personnel in the age group of 35 years to 60 years from Japanese automobile companies as also Japanese IT firms located in Delhi-NCR. We may also decide to provide Japanese food on campus,” he said on a lighter note.
The total cost of the 65-acre project is Rs 9,000 crore which may be borne through internal accruals, debt or through contributions from promoters.
“The final investment will depend on the choice of the components utilised for the project and how things move forward over the next 10 to 15 years,” explained Akash Khurana, CEO, Krisumi Corporation.
Krisumi city has a total revenue potential of $2 billion. Krisumi Waterfall Residences is part of the first phase of the development and has a total of three towers with 433 apartments (2, 3 bedroom and penthouses). It is located in Sector 36A and has easy access to both Aero City where most Japanese offices are located and to Manesar and Neemrana where most production and manufacturing units are.
As for the timelines, Khurana said that despite COVID-19 and other challenges such as construction shutdowns due to pollution and stubble burning, the company has decided not to avail the six-month extension provided by RERA authorities.
“We have stringent penalties included as part of our contract with Tata Projects, our construction partner. We have factored in stoppages in our schedule. We will be completing all 433 units that are part of Phase 1 by June 2024,” he said.
As for rental yields expected from the serviced apartments, Vineet Nanda, Director- New Projects, India Sotheby’s International Realty, said it would not be anything less than 5.5 percent, considering the Japanese product offering and the target audience being the expat community. The average rental yield in the Indian real estate market is usually around 1.5 percent.
Nanda was behind the success of The Room, luxury studio apartments in Sohna Road by Central Park, where the average rental yield for apartments of sizes 837 sq ft to 1,397 sq ft was upwards of 6 percent.
Eventually, the entire 65-acre development will be self-integrated project drawing on inter-component synergies. The entire project is designed by the world’s second-largest design firm Nikken Sekkei of the Tokyo Sky Tree fame.
“The architecture, landscape planning and the interior design for our first phase called Waterfall Residences have been done by the Japanese design firm. We have retained them not only for the concept design but for the detailed plan,” says Khurana.
The company has also onboarded a technical team from Japan. “They have gone through all the designs. We have four people only focusing on the water-proofing and seepage aspect. Everything is about going down to the smallest detail. And it is all about bringing back consumer trust, encouraging those sitting on the fence to invest in real estate,” he said.
As for the cost of the units, the units are available in the range of Rs 1.3 crore to Rs 2.75 crore. “That is the sweet spot,” he adds.
The company is simultaneously drawing up plans for commercial buildings expected to come up in subsequent phases. “We might include a fair bit of commercial in the next phase. Since the project falls under the transit-oriented development scheme, we are allowed to use almost 30 percent of the FSI for commercial. Once we finalise the product mix for subsequent phases, we will start getting the designing done,” he told Moneycontrol.
As for now, the company is focusing on the first phase which comprises only 7 percent of the total floor space index available for the entire project.
“The idea is to set a benchmark in the market with the first phase of the project and then move to the next level,” he adds.