BackUnlisted realty firms make a beeline for land assets
Unlisted realty firms make a beeline for land assets
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Bangalore: Unlisted realty firms are making a beeline to buy expensive land in key markets as they look to expand, contrary to the asset-sale spree of India’s top listed developers trying to shore up capital.
Piramal Realty Ltd’s Rs425 crore acquisition last week of leasehold rights to a nearly 1-acre property in Mumbai from Hindustan Unilever Ltd (HUL) is only the beginning of a number of land purchases that are underway, according to property analysts.
Mumbai-based developer Lodha Group intends to spend about Rs1,500 crore on land acquisitions alone in 2012-13, said managing director Abhisheck Lodha. Last year, the company launched five projects and acquired nearly 400 acres in and around Mumbai, considered the country’s most expensive property market.
“Though it is true that many developers are looking to sell assets, the issue is more about developers who can execute and sell, (and these) are the ones buying new land and expanding," said Lodha. “We also think Mumbai has good potential and good quality of supply."
Piramal Realty, promoted by the Ajay Piramal group, is exploring land and asset acquisitions through outright purchases as well as joint developments in Mumbai, said people familiar with the development.
A Piramal Realty spokesperson declined to comment on acquisition plans, but a top official said last year that the company intended to invest about Rs1,500 crore in the first leg of its expansion. These plans are ambitious and starkly different from what many listed real estate companies are doing—holding close-door meetings to decide on which non-core assets to sell.
A dozen developers, including the country’s largest listed real estate firm DLF Ltd, were planning to monetize assets worth nearly Rs15,000 crore, Mint reported on 30 January.
Property firm M3M India Ltd bought 28 acres of land in Gurgaon from DLF for Rs440 crore earlier this year. Kunal Banerji, president, M3M India, said the company is looking to buy more assets in the national capital region, including in Gurgaon and Faridabad.
“Unlike listed firms, which have leveraged themselves on land, we haven’t emptied our coffers yet," said Banerji. “There are many opportunities from listed developers, who are in selling mode, and it’s a question of acquiring and marketing those same projects well."
Property analysts say that after nearly a year of slow home sales, the pace is bound to pick up in a couple of quarters with developers looking to expand.
“Unlisted developers are either buying land or entering into joint ventures depending on the cash available," said Amit Kaicker, head, north India, land and industrial agency, at Jones Lang LaSalle, a property advisory. “In the current scenario, listed developers will buy land only if absolutely necessary because many of them would have created value for themselves by buying land in the process of getting listed."
In southern India, particularly Bangalore, that has seen a healthy sales graph in the past two quarters owing to stable prices and a range of mid-market projects, developers are aggressively looking to buy land, say property consultants.
Salarpuria Sattva group and RMZ Corp., both unlisted real estate firms in Bangalore, are in the fray to buy a nine-acre property from HUL in a Bangalore suburb.
Bangalore-based RMZ is eyeing other properties as well in the city, including incomplete office developments and greenfield projects.
“We have about Rs750 crore waiting to be deployed in buying and developing various office projects. We are also upbeat about the residential space and would want to invest about $115 million into projects," said Raj Menda, RMZ’s managing director. Salarpuria Sattva, also a Bangalore firm, is in the process of buying two-three assets in the city and has plans to acquire properties in Hyderabad, Kolkata and Nagpur as well this financial year.
Salarpuria latest purchase was a 4-acre asset in Bangalore’s Whitefield area that was on the verge of being declared a non-performing asset by its lenders, said chairman and managing director Bijay Agarwal.
While DLF has said it will continue to divest assets that it does not plan to immediately develop, many listed developers are trying to strike a balance between selling and developing the land in their portfolios.
Pujit Aggarwal, managing director, Orbit Corp. Ltd, a mid-sized listed developer in Mumbai, said the company plans to launch at least four projects this year, while also selling one of its key projects that could fetch as much as Rs300-500 crore in cash.
madhurima.n@livemint.com
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