Property developer Brigade Enterprises posted a 117 % increase in net profit in Q2FY24, on the back of strong new bookings of 1.67 million square feet valued at Rs 1,249 crore, up 23 % from the previous year. The company’s total income also rose 54.35% in September quarter of FY24. In an interview , the company’s managing director Pavitra Shankar tells Raghavendra Kamath about the company’s strategy in both residential and commercial properties and outlook for the sector.
The company has a launch pipeline comprising 1.83 million square feet of leasing space. How confident are you in leasing office assets when there is a slowdown in hiring by IT firms and continued hybrid work models?
The outlook for the sector looks bright, with India having one of the highest work-from-office rates in the world. The demand for Grade A office spaces remains strong due to tenants wanting better facilities and amenities to encourage their workforce to come back to the office. Our multi-domain presence in residential, retail and hospitality enables us to create a dynamic and vibrant mixed-use environment in many projects. The upcoming launch pipeline is non-SEZ space, where leasing has been healthy for good locations and quality product. Bangalore is also a market where growth is driven by GCCs, startups, and technology driven companies, and is therefore not dependent only on IT firms.
What’s the launch pipeline in residential real estate in Q4FY24 and FY25?
For the next four quarters, we have a strong pipeline with a total of 12.95 mn sq ft, out of which 11.12 mn sq ft is residential and 1.83 mn sq ft is leasing space.
What kind of increase have you made in residential prices in the last six months?
Overall, we have increased prices anywhere in the range of 10% to 20% over the last 18 months, depending on the project location,positioning, and stage of construction.
How long do you think the residential sales boom will last?
The residential cycle has been on the upswing since June 2020, rapidly building momentum, especially over the last 12-18 months. We believe there is still room to grow in terms of supply and pricing in the near-to-medium term, a few more years.
What are your plans in the hospitality segment?
The hospitality Industry is bouncing back after going through challenging times during Covid. We are currently planning to invest in a few more hotels to meet the rise in demand from domestic travellers. Our focus will remain on our core markets, and we do not have any plans to venture outside the Southern markets as of now.
What is your outlook for residential rents in IT hubs?
Residential rentals will remain strong in IT hubs, as people come back to office from remote working arrangements and until they make their own home purchases. As long as there is migration into these cities and micro markets due to job creation, there will be good demand for rentals, which is also a precursor to demand for buying homes.
What are your fundraising plans in the equity and debt segments in the coming quarters?
Real estate is a capital-intensive business. We fund our growth with a mix of internal accruals, and construction financing. We can also access capital through our leased portfolio. We do not plan to raise equity in the public markets. However, we can evaluate private equity investments to grow our capex-heavy businesses like office, retail and hotel, provided mutual alignment of interests.