Brigade plans to spend up to Rs10,000 crore over 3 years

Mumbai: Bengaluru-based Brigade Enterprises Ltd will spend up to Rs10,000 crore to double project launches across verticals, including residential, commercial and hospitality, in the next three years, a top company executive said.

Despite the slowdown in launches in the past year, BSE-listed Brigade Enterprises has lined up around 20 million sq. ft of residential space to be developed in the next three years in south India, including in Bengaluru, Chennai and Hyderabad. In the past three years, it launched around 10 million sq. ft. 

“We will be investing anywhere between Rs8,000-10,000 crore in the next three-to-four years to fund our ongoing and upcoming projects. Our funding would be a mix of internal accruals, sales and institutional finance,” Brigade Group chairman M.R. Jaishankar told Mint.

Brigade Enterprises already has a partnership with Singapore -based private equity firm GIC Singapore Brigade under which each party will invest Rs750 crore for land purchases. The platform has concluded signed land deals, two in Bengaluru and one Chennai.

According to Jaishankar , the residential market is showing signs of recovery after the slump due to demonetization, implementation of new real estate regulations and goods and services tax (GST).

The government’s thrust on affordable housing would help push growth in the segment, he said, adding the firm has earmarked around Rs3,000 crore for building affordable houses.

With prices of up to Rs65 lakh per apartment, a large portion of the launches will come under the affordable housing segment. 

According to rating agency ICRA, despite the slowdown in the overall real estate market, listed firms have improved sales volumes and continued to gain market share.

According to a 12 March report by ICRA, sales of 11 large listed firms, including Prestige Estates Projects Ltd, Sobha Ltd, Puravankara Ltd, Brigade Enterprises Ltd, DLF Ltd rose 29.3% to 17.26 million sq. ft (mn sq ft) in the nine-month period ending 31 December 2018, from 13.35 in the same period a year ago.

Brigade has also lined up an aggressive expansion drive to more than double its commercial office business. The company has chalked out plans to launch another 14 million sq. ft of office space in cities such as Hyderabad, Chennai and Trivandrum, entailing an investment of around Rs4,000 crore.

At present, the company which builds the World Trade Center towers in India, operates around 9 million sq. ft of office space and earns a rental revenue of around Rs250 crore. 

With the opportunity to REIT these assets in future, commercial office has now become a strategic business vertical, said Vishal Mirchandani, chief executive officer (CEO), retail and office spaces, Brigade Enterprises.

The company is also in the process of moving all its hotel assets into a separate unit with the intention of bringing private equity investors into the business. Under the new plan, an investment platform of around ₹ 1000 crore in partnership with private equity firms would be created to fund its future. The strategy is in line with its plan to double the number of hotel rooms to 2,000 by 2020.

At present, the company’s hospitality business spans across five hotels operated under five major brands including global hospitality brands Grand Mercure and Sheraton. 

“We created a separate unit with an intention of inviting private equity players. By 2020, we would be having around 2000 rooms. In order to grow to 4000 room keys, we need strategic financial partners,” Jaishankar said. 

Besides, Brigade is also undergoing a feasibility study to enter the industrial park business. It hopes to utilise around 50 acres of its land bank in Karnataka to build industrial parks, with warehousing space components.