The pain and uncertainty of the impact of the coronavirus on all kinds of business, be it globally famous international businesses or small owners of petty businesses, it is staggering and likely to be substantial. This agonizing coronavirus outbreak has not only decreased the sustenance and thriving capacity of various kinds of businesses but also amplified the vulnerabilities regarding various aspects such as varying customers’ habit, declining purchasing power of an individual etc. Prestige Group which got enlisted as one of the top new minted billionaires; it saw the share prices scaling new heights during 2019 and the stake value increasing to the value of 8,800 crores. Until Feb end, Prestige Group saw the stock was quoting Rs 231 per share, up by 3 per cent on the BSE, It is this profit reaping company that urged the Global player Blackstone to make its entry into the realty arena. “It will be Blackstone’s single largest realty investment in the country and will also eclipse the $1-billion raised through listing of India’s two real estate investment trusts (REITs) — Embassy and Mind space Business Parks,” said a report by The Economics Times.
US private equity competitor Blackstone might purchase Prestige Group's rental income assets for over $1.7 billion (Rs 12,745 crore). If the business covenant ends up successfully then the major realty giant Prestige Group is looking forward to reduce the level of its rate of debt by rapidly selling its assets. It has decided salami slicing the assets in order to gain liquidity which would in turn be invested to create yet realty magnificence. By doing so, Prestige Group is ahead to build another mammoth commercial and realty portfolio in next five years.
It is supposed to be the growth phase for prestige group. News reports had suggested that Blackstone is looking to acquire 20 million sq. ft of commercial space, including 16 million sq. ft of ready and completely leased assets. Bengaluru-based Prestige has over 30 million sq. ft of new offices and over 5 million sq. ft of new malls that are in various stages of development, the company has 37 ongoing residential projects, comprising around 43.97 million sq. ft, there are 23 upcoming projects totaling 30.31 million sq. ft at locations including Bengaluru, Hyderabad, and Chennai. It has put launches on hold till August because of Covid-19-led interruptions.
“Being one of the oldest and largest developers in south India, they have many good land parcels which they can develop. The company has bright prospects,” said Ashok Kumar, managing director at Gennex Partners, while commenting on the stupendous growth of Prestige Group. Prestige Group has also decided to integrate with PE funds in the future as well.
According to a Crisil report, demand and supply for residential space fell by 70-90 per cent and more than 80 per cent in First Quarter of the Financial Year 2020-2021. The agency also expects the demand to fall by 50-60 per cent in FY21 due to the ongoing pandemic outbreak. Prestige Estates reported a market concavity of 84 per cent in its net consolidated profit during the first quarter of the financial year 2020- 21. The launch of new projects is in temporary hiatus and completion of the under-construction projects are deferred due to the viral spread scare.
What will be the immediate repercussions in the field of realty business for prestige Group? The Prices across affordable, mid and luxury segments may fall by 2-4 per cent, 7-10 per cent and 5-15 per cent respectively. Bengaluru-based Prestige Estate intends to sell around 8 million sq. ft of completed office parks and nine operational malls comprising 4 million sq. ft, sources said.
The Prestige group may also sell 50 per cent stake in about 3-4 million of office projects under construction. This big ticket deal is likely to be concluded in the current quarter. If the deal is clinched, it will focus on the development of over 30 million sq. ft of commercial portfolio for future growth of the company. When other businesses are fighting against the pandemic, this would be successful - deal is going to be on top of headlines in the realty space. The talks have moved forward to an advanced stage a week ago and the deal could be worth 1.5 to 1.8 billion dollars. But when contacted by the press, Blackstone denied commenting on the above and Prestige Group did not elicit any riposte for the questions posed by the press and media in this regard. This deal will elevate Blackstone to be the head honcho and a largest real estate investor in the country. Last year, Blackstone and Prestige Group intended to amalgamate and integrate its businesses into one canopy but the deal did not transpire to it dismay.
Social distancing has become the necessity of the day and many potential customers are restricted and confined to their households which resulted in the substantial decline of footfalls and positive purchasing events. Purchase is happening but shopping is not emerging out says the press sources. Due to the lockdown restrictions laborers were moving in large numbers to home towns but Prestige Group was successful in taking care of its workers by assisting them in their daily need and also providing necessary support and aid for their daily sustenance.
The ripple effects of COVID 19 is felt not only realty sector but also in other major businesses. Rebuilding Customer confidence and flexibly adapting to the customers’ preferences are the key points on which Prestige Group need to work on says the Executive Director of Prestige Group, Zaid Sadiq, June 2020. Businesses which satisfy the requisites and preferences of the customers during this crisis will enable it to grab the opportunity to revive and achieve the hold of imparting the best and quality services to the customers he added.
Being prepared to any kind of disaster is the major area in which every business need to work on and Prestige Group has absorbed an indispensable fact that the need of the hour is to be disaster-resistant and it also believes that every crisis is an opening for a new opportunity.