HDIL plans to sell TDRs worth Rs1,000 crore this year
Over the next 12-15 months, HDIL will sell TDRs worth Rs1,000 crore, with prices ranging between Rs4,000-6,000 a sq. ft
Bengaluru: Realty firm Housing Development and Infrastructure Ltd (HDIL) plans to sell transfer of development rights (TDR) to the tune of 2 million sq. ft for about ₹ 1,000 crore this year, on the back of a revival in the TDR market, said a top company executive.
TDR is essentially a certificate that confers the right to build on a specified area. The holder of the certificate can either develop the specified land himself, or sell it to a developer who needs additional FSI or floor space index, the ratio of a building’s total floor area to area upon which it is built.
In Mumbai, anyone who surrenders a piece of land for public purposes, say for slum rehabilitation, gets land development rights (TDRs) in return from the municipal corporation.
“There is evidently a revival in the TDR market and we are seeing very good demand. We didn’t sell any TDRs in 2014-15, but in 2015-16 so far, we have sold more than 5 lakh sq. ft, which has helped generate robust cash flows for the company," said Hari Pande, vice-president-finance and investor relations at HDIL.
In December, HDIL sold the development rights of a land parcel at Kurla, in suburban Mumbai, to property developer D.K. Realty (India) Pvt. Ltd for ₹ 649.51 crore.
Over the next 12-15 months, HDIL will sell TDRs worth ₹ 1,000 crore, with prices ranging between ₹ 4,000-6,000 a sq. ft. HDIL has a sales target of about 200,000 sq. ft every month.
HDIL expects to generate most of the TDRs from the slum redevelopment project in Kurla.
The real estate market in Mumbai, after several months of a visible slowdown, has started picking up over the last quarter. Launches have gained pace and enquiries from potential customers have revived.
HDIL, with a debt of ₹ 2,970 crore as on 30 September, is focused on deleveraging its balance sheet. It has brought down debt from ₹ 4,000 crore in 2014 to the current level, and aims to further reduce it to ₹ 2,000 crore by March 2017.
“...As residential sales remain sturdy for HDIL, 2QFY15 recorded a ₹ 2 billion incremental delta from TDR sales. With construction and handover of rehabilitation units on, HDIL is likely to generate over 6 million sq. ft of TDRs in the next 30 months. At ₹ 4,000 a sq. ft, the TDRs are valued at ₹ 24 billion. Management has reiterated its stance to reduce debt to ₹ 25 billion in the near term," analyst Samar Sarda of Kotak Institutional Equities Research said in a 11 November report.
Like many other real estate firms, HDIL too didn’t launch any project in the last six months, preferring to focus on its ongoing residential projects.
But this year the HDIL plans to launch a few projects in the coming months around Mumbai.
A million sq. ft of residential development in suburban Ghatkopar, plotted development in Virar—where it will sell smaller plots to individual buyers and larger plots to other developers—are on the cards.
HDIL shares fell 0.25% to close at ₹ 78.75 on Wednesday on BSE; the benchmark Sensex rose 0.7% to close at 24,854.11 points.
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