Realtors go for management contract model

Realtors go for management contract model
The Economic Times, June 9, 2009, Page 10

Gouri Agtey Athale PUNE

SINCE land is the one feature common to businesses as diverse as hotels, hospitals, educational institutions and golf courses, real estate developers are diversifying into these areas.

They are looking at extending the management contract model of the hospitality industry to the other businesses. In hotels and hospitals, developers are looking at management contracts while building their own schools and colleges, which will be run by professionals.

Well-established local hospitals also see the value in this. For instance, Ruby Hall Clinic, an established hospital in western Maharshtra, has tied up with two developers for three hospitals, each with 170-180 beds. It will also set up one hospital on its own, Ruby Hall Clinic’s Parvez Grant said. He added that when a hospital is majority-owned by a developer, it will retain the brand name Ruby. The chairman and managing director of Vascon Engineers R Vasudevan, a developer, said he is working on a three to five years strategy, where he will have verticals in the main company. These verticals will be for hotels, hospitals and educational institutions.

“We are already in the hotel space. Of our eight hotel properties, we are majority stakeholders in five and minority in the balance three, with plans to add one hotel property annually. We will consolidate our hotel projects, buying out our minority partners. This exercise is currently underway, to separate those hotel properties in which we have a majority stake from the ones in which we are minority shareholders,” Mr Vasudevan said. Vascon Engineers’ hotel vertical could be formed in another six months. Indications are that he could consolidate all FDI-compliant projects, making it easier to route the funds.

Another developer, Oxford Properties, has made some progress. Its chairman, Anil Seolekar, said they have formed separate companies to look after their allied businesses. The developer has a 10-15 year plan and this includes a small city, an 800-acre development in the Lavale .