Buoyed by high demand for residential properties after the pandemic, top property developers have gone on a land buying spree in the last couple of years. These include both listed and unlisted players. For instance, listed players Godrej Properties, Oberoi Realty, Prestige Estates and Brigade Enterprises have purchased over 400 acres whereas even private developers such as Birla Estates have bought around 35 acres.
According to data from Anarock Research, around 180 deals spanning 5,215 acres have been done in the past two years. This comes at a time when in 2023, residential sales hit a decadal high.
According to data from TruBoard Partners, a real estate services firm, leading the pack of land buyers is Godrej Properties, which has acquired 250 acres of land in the last two years in tier 1, 2 and 3 cities.
This was in stark contrast with the company’s business model before the Covid where it opted for an ‘asset-light model’. According to analysts, this change of making outright purchases came because the company realised the business potential in residential properties. It has bought land parcels in Bangalore, Gurugram and Nagpur in the recent months.
While a Godrej Properties spokesperson did not respond to a mail, Pirojsha Godrej, chairman of the company, said in FY23 annual report that they believe the residential real estate sector in India will continue to grow fast in the years ahead providing opportunities for leading developers to both participate in sectoral growth while also gaining market share.
“We are able to meet our aspiration of growing their sales at 20% a year while also providing them the opportunity to expand margin in line with their goal of achieving an ROE of 20%,” said Godrej.
Bengaluru-based Prestige Estates Projects is also not lagging behind. The company has bought about 120 acres in Bengaluru and Mumbai Metropolitan Region in the last two years.
Its subsidiary, Prestige Projects, bought a prime sea-facing land parcel near Marine Lines and Charni Road in South Mumbai from DB Realty for over Rs 704 crore and it is already developing a couple of projects in Mumbai. Its land acquisitions are part of its ambitious sales targets, analysts said.
It is expecting sale bookings to rise 55 % and touch an all-time high of Rs 20,000 crore in FY24. For FY25, it has set a target of Rs 25,000 crore – a growth rate of 25%. Another Bengaluru-based player Brigade Enterprises has bought over 16 acres in Chennai and Hyderabad in the last two years.
Mumbai-based Oberoi Realty has bought 35 acres of land in the region whereas Lodha Group has bought about eight acres of land. Private players like Birla Estates, part of Aditya Birla group, have also joined the party and bought 34.4 acres in Pune and Bangalore.
According to experts, consolidation and the ongoing boom in the housing sector are the prime reasons for rising land parcel amid top realtors. “The strategic land purchases by major players are facilitated by an ongoing consolidation of market influence and favorable accessibility to capital resources,” said Sangram Baviskar, founding member and managing director – real estate at TruBoard Partners.
He believes that the ongoing expansion with a clear inclination towards established developers has given them the confidence to buy land parcel in both their own regions and even explore opportunities in other areas. A case in point being Godrej Properties which is not only purchasing land in Mumbai, NCR and Pune – all its existing markets –but also expanding in areas like Hyderabad, a new market for the group.
“Many of the top players have seen significant jump in sales in their residential projects and they are, thus, vying for more land as demand remains upbeat even today,” said Anuj Puri, chairman at Anarock Property Consultants, adding that if we are to look at the price trends in the last three years, there has been a minimum of 25% jump in land prices across major cities.
The growth in prices varies not just city-wise and micro market wise, but also several other factors play a role such as infra development in and around the land parcel, proximity to any major infra projects (either upcoming or operational) and others, he said.