While few developers have ventured into international property markets like London, Dubai and Spain, this is the first time an Indian property development company has made a foray into the US market.
Gera Developments established its wholly owned US subsidiary, Outdo Inc. to invest in these project special purpose vehicles. Outdo Inc. owns a 50% stake in the first two projects, while the balance is with its partner, a US-based developer.
Of these four projects, the developer has completed the construction of two projects located in the South of Market district in the immediate vicinity of many technology companies, including the headquarters of public companies Twitter Inc., Dolby Laboratories, Inc. and Square Inc.
“We have learned a lot from the experience of developing projects in the most advanced market in the world. Whether it’s the importance of making all the decisions or reaching full financial close before the project begins. These learnings will also help us improve and outperform our performance in the Indian market,” Rohit Gera, MD, Gera Developments, told ET.
Gera expects the two projects, 1288 Howard on Howard Street and The Center at 42 Otis Street San Francisco, for which the company has invested around $120 million or close to Rs 900 crore to turn landmarks into their micro -markets.
The developer will independently undertake the next two projects in the San Francisco Bay Area and these are currently in the design and approval phase.
“Our solid reputation and heritage, financial credibility and steady sales growth, coupled with a high degree of customer focus, has enabled us to look beyond India, our home turf. We have already started to receive very positive customer feedback and response for these 2 projects and we are confident to sell these two projects on schedule,” said Nikhil Gera, President, Outdo Inc. “As we turn towards 2022, we plan to continue our expansion into California – a key growth market for us.
According to Nikhil, who resides in the San Francisco Bay Area and runs Outdo Inc., the first two projects are expected to generate revenues of over $150 million or Rs 1,150 crores, at an average selling price of over $1,350 or Rs 1 lakh per square meter. ft.
Construction of the two completed projects had begun shortly before the Covid19 outbreak and continued throughout the pandemic. The Covid19-led lockdowns did not stop or delay work as residential construction was treated as an essential service by the City of San Francisco.
Unlike India, regulations in the United States do not allow the sale and collection of construction progress payments during construction. Therefore, sales can only take place after completion of construction. Therefore, all banks require projects to be 100% closed before construction begins.
San Francisco’s condo market has been weak during the pandemic as people preferred to live in single-family homes, but is expected to pick up as employees return to the office.
Additionally, the local venture capital economy continues to be robust, as evidenced by the 95 initial public offerings (IPOs) of San Francisco Bay Area-based companies in 2021 that raised billions of dollars. . This massive wealth creation continues to drive demand for housing.