Regional Headline :

Realty capital commitment may reach 3 trn in 2 years

| PRIVATE CAPEX | CHAMPIONS -V

'RAGHAVENDRA KAMATH ‘Mumbai, June 27 i

REAL ESTATE PROJECTS saw %1-trillion investments in the past two years. That is set to go up by three times over the next couple of years as developers bet big on the . boom in residential property and sustained leasing activity in commercial property. Virtually every company in the space is spending crores to buy land parcels and to develop them.

Anand Kulkarni, director, Crisil Ratings, points out the capital committed across residential and commercial properties in FY24 and

REAL ESTATE OF AFFAIRS

Fund raising by realty, hotel cos

IPOs (FY24), size in % crore) Samh R Hotels ‘ 1370

Suraj Estate Developers

Juniper |

L

QIPs (FY24) size in X crore)

Brookfield India Real Estate Trust

Microtech Developers

Anant Raj

Industries o

920

Chalet Hotels

Source: Primedatabase.com

1,000

® Prestige Estate to have a capex of ₹3,000-4,000 crore across segments

m Brigade may | M Brigade

spend some to spend ₹6,250 crore ₹850 crore on building to add residential 1,000 property hotel keys

m IHCL recently said it has a five-year capital deployment plan of 3,500 crore

FY25 would be around %3 trillion. So promising is the outlook that last year alone about 1,185 acres was picked up while 410 million sq ft of residential properties were launched. The stakes are get ting bigger with project launches tipped to jump by 25% this year. Moreover, the tab for construction could be as high as 75,000 crore, Sangram Baviskar, founding member and MD-real estate at

TruBoard Partners, estimates. Real estate sales have been on the upswingin the aftermath of the pandemic. Home sales hita decadal high in Q1FY24 with nearly 130,000 units sold across the top

seven cities, according to Anarock Property Consultants. Sales have since tapered offin Q2— which saw a sequential decline. Nonetheless, they are tipped to grow 8-10% in 2024 on abase of 480,000 unitsin 2023. Office absorption is also on an uptrend with the six months to June recording 29.4 million sq ft,a 19% jump over the first half qof FY23,according to Colliers.Absorption could cross 50 million sq ft before the year is out much like in 2023 and 2022.

* ShobhitAgarwal, MD and CEOat Anarock Capital, believes it’s the strong demand that is encouraging developers tolaunch more projects. Also, the inventory overhang is virtually gone. “There has been a shift by most employers to move away from work-from-home to workfrom-office (partially or fully).Also, buyers have felt the need to own

larger homes,” said Jayant B Man madkar, CFO, Brigade Enterprises. The big boys are all upping the

ante. Brigade Enterprises, for

. instance, is expected to buy land

worth 1,200 crore annually and spend some 6,250 crore on constructing residential property. It will develop 16 million sq ft of projects which are in the pipeline; of this,around 12.5 million sq ftisin the residential sectorin Bengaluru, Chennai, Hyderabad and Mysore. The company is also spending %850 crore on hospitality projects as it looks to add 1,000 hotel keys.

Manmadkar says most developers should continue to generate strong cash flows which they can put to work. At the same time, money is,being mopped up via IPOs, QIPs and rights issues.

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Realty capital commitment may reach I3 trn in 2 years

AS ANAROCK’S AGARWAL points out, “The improved cash flow visibility and the better corporate governance under RERA have given financial institutions confidence in developers, he said.

Prestige Estate Projectshassaid it willsell 5,000 crore worth of shares to institutional investors. The company, which incurred a capex of ₹3,000-4,000 croreacross segments last year, is looking to incur similar amount this year, the management indicated on a recent earnings call. The company also plans to monetise its hotel business by selling shares of itsarm Prestige Hospitality Ventures.

. InFY24, itachieved the highest-ever launchesof 31 millionsq ftintheresidential business with a GDV (gross

developmentvalue)of 21,000 crore. Bengaluru-based Sattva Group plans to invest ₹12,000-14,000 crore in the next tw-three years developing commercial office, residential and hotel projects.

Spurred byrising demand, hotels tooareadding capacity.Indian Hotels Company (IHCL) recently said it has commenced a five-year capital deployment plan of ₹3,500 crore.The money would be used to upgrade assets,build capabilitiesand forselect new projects. The company plans to open 25 hotels in FY25. It will also introduce a newformat for the Gateway brand as it moves towardsa 100 hotel portfolioby 2030.

(This concludes the series on private capex champions)