Eros to venture into real estate market

The average return on investment in a project is around 70 per cent and the time frame is around two-and-a-half years, CEO saysDeepak Babani

Eros Group, a Dubai-based consumer electronics retailer, is entering the real estate market in bid to diversify its portfolio and boost profits.

“We are looking at a different model in real estate development. We will fund the project, and if we don’t get buyers, we will complete the project and sell the units,” Deepak Babani, CEO of Eros Group, told Gulf News in an exclusive interview.

“We are looking at the land bank, labour camps, villas segment and apartments,” he said.

The company in 2013 ventured into food business by taking the franchise of Scottish chain Baguette Express as a new avenue for growth and opened four outlets in Dubai.

“We are still getting our foot on the ground in the food business and are far away from profitability, but we will be there. We are looking at one or two more outlets but we are not getting the right spot,” he said.

Babani said that real estate is a profitable business and the average return on investment in a project is around 70 per cent and the time frame is around two-and-a-half years.

When asked whether Eros will launch an initial public offering (IPO) to raise cash, he said that the group has internal resources to raise cash and sees no need for a share sale.

“We have good relations with banks in the UAE,” he said.

The group, which controls around five to six per cent of the total consumer electronics market in the UAE, sees some challenges in the current scenario of the market.
He said the UAE consumer electronics market is expected to grow between 10 and 12 per cent this year, same as last year, due to the impact on flat TV panel sales.

“The fall in TV sales started from India customs duty hike on TV exports and the panel market is going down. But smartphone sales are going to grow by 35 per cent and tablet market by around 12 per cent this year,” he said.

Babani said that the changes people are making on new technology are not as rapid as the industry expected.

Last year, the panel sales did not grow as Eros expected. The growth for the company came from mobiles and small home appliances. Number of TV panel sales was less but in terms of value, it was the same as in 2013.

He said that air purifiers, a new category, had growth of about 100 per cent as people are getting more conscious on air quality. The market size is still small.

The group expects revenues to jump by nine per cent this year to Dh4.8 billion compared to Dh4.4 billion last year, due to the drop in oil prices and the rouble effect.

Tourism has an “impact” on consumer electronics sales in the UAE.

In 2013, he said that re-exports to Egypt and Libya markets was hit badly. Re-exports to Iraq have been going down for the past three years. Re-exports contribute about 20 per cent to the group’s total revenues.

“We could look at setting up stores if sanctions on Iran are lifted. It will be a big bonus. It may or may not happen but directions are positive,” Babani said.

“We are planning to open three more outlets in Dubai and looking for the right space in malls,” he said.
Source: Naushad K Cherrayil, Staff Reporter,


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