Mumbai: Mumbai-based developer Shapoorji Pallonji Real Estate plans to buy up to 100 acres across India for about Rs750 crore in the next one year to expand its affordable housing business, a top company official said.
The company is close to signing two land deals of 15-25 acres each in Maharashtra and the National Capital Region (NCR). The real estate unit of Shapoorji Pallonji and Co. Pvt Ltd is already in talks to purchase 15 acres in south India.
“Our plan is to acquire close to another 100 acres of land, which will have total development potential of around 12 million sq. ft in the next 12-15 months. We will be putting in a total investment of around Rs700-750 crore on it,” said Venkatesh Gopalkrishnan, executive vice-president and chief investment officer, Shapoorji Pallonji Real Estate.
The developer is also gearing up to launch its second affordable housing project at Virar, a Mumbai suburb, next month.
It has lined up its third project on over 35 acres that it owns at Hinjewadi in Pune to be launched by early next year.
Both these projects would have a total of 3,300 housing units.
Earlier this year, the company launched its first project under the brand Joyville at Howrah, near Kolkata. The development will have more than 3,000 units on 30 acres.
A 500 sq. ft, one-bedroom unit will cost around Rs20-22 lakh, while two-and-a-half or three-bedroom units are priced at around Rs45 lakh.
Gopalkrishnan said the government’s demonetization move will not impact the company’s land purchase plans and it would continue to execute its expansion strategies even though there could be a temporary slowdown in sales in the coming months.
The company would continue to pursue land acquisitions as land prices are either likely to remain unchanged or fall in the coming months, he said.
“Land prices are certainly not going to go up because of this (demonetization). It will probably remain the same or may soften a bit in certain places. One may look at it as a window of opportunity for acquisition of land. So, certainly, we are not going to hold back on that,” Gopalkrishnan said.
Last year, the group had joined hands with Standard Chartered Private Equity, International Finance Corporation (IFC)—an arm of the World Bank—and the Asian Development Bank (ADB) to form an investment partnership that would put in about $200 million to build 20,000 houses across the country.
Jai Mavani, executive director, Shapoorji Pallonji and Co. Pvt. Ltd, said that at any given time, the company was actively evaluating two-three opportunities, but only a few got to the due diligence stage.
“Land acquisition in India is a very tricky process. It takes time, but in little over one year of our platform getting launched, we are already on our third project. So that’s fairly good speed,” he said.
Some large companies such as Tata Housing Development Co. Ltd and Mahindra Lifespaces Developers Ltd have already entered the low-cost residential space.
“Many corporates are actively looking for land away from the city area for affordable housing projects because the only way to support low cost is to acquire land at lower rate,” said Fali Poncha, director-residential and land (Mumbai) at property consultant Knight Frank India.
“And especially in the periphery of the city, companies do get large portions of aggregated land from local aggregators and the main objective of these corporates is to scale up as volume is very important for low-cost and affordable housing,” he said.