Realty firm Mahindra Lifespace Developers is looking to acquire a few land parcels this fiscal to build housing projects with sales potential of Rs 3,000-4,000 crore, a top company official said.
The company will acquire these land parcels either through outright purchase or by forming Joint Development Agreements (JDAs) with landowners.
Mumbai-based Mahindra Lifespace Developers Ltd, part of Mahindra Group, is one of the leading real estate players in the country. The company’s market cap recently touched USD 1 billion (about Rs 8,000 crore).
In an interview with PTI, the company’s Managing Director (MD) and Chief Executive Officer (CEO) Arvind Subramanian said Mahindra Lifespace is looking to acquire new land parcels for business expansion in three focus cities — Mumbai Metropolitan Region (MMR), Pune and Bengaluru.
He highlighted that the company already acquired a land parcel this fiscal that has a Gross Development Value (GDV) of Rs 1,700 crore and the deal pipelines are strong.
“Last year, I had set a guidance of Rs 2,500 crore worth of new land acquisition. All these numbers are GDV, so the sales value of the new land that we acquire and not the cost of land acquisition. We did Rs 3,800 crore last fiscal year and this year we have already done Rs 1,700 crore. We will certainly be doing at least an equivalent amount in the rest of the year,” Subramanian said.
In terms of the GDV, he said the new land acquisition should be in Rs 3,000-4,000 crore range and the company was well above the guidance in creating new business development opportunities.
Mahindra Lifespace Developers in July informed about acquisition of a new land parcel in Pune, which has a development potential of 2.1 million square feet with an estimated sales value of Rs 1,700 crore.
On increasing competition among large players for land acquisition, Subramanian said: “There is a lot of heightened interest in land and developers are getting very active. But at the same time the landowners have also become much more selective about which developers they want to do business with…”
Five years back, he said, landowners would simply give land to whoever give the highest, bid but not any more.
“Now landowners realise that people may have given the highest bid but they are not able to complete the transaction because they are not able to get financial closure. So many landowners are saying: look, I will only do business with a larger, more well-established developer, corporate developers so that I can have surety that my deal will get completed,” Subramanian said.
On the operational front, Mahindra Lifespace is targeting a 2.5-fold jump in its annual sales bookings to Rs 2,500 crore in the next three years.
The company had achieved sales bookings of Rs 1,028 crore in the last financial year.
“The first quarter has set us up very well for the year. We are expecting very strong continued growth in quarter two and the rest of the year as well. We will certainly be above our FY22 numbers. The question is how much above, which time will tell, but we are extremely positive,” he said.
The company clocked Rs 600 crore of residential sales during the April-June quarter of the current fiscal year. The collections from customers were also healthy at about Rs 270 crore.
Asked about the FY23 target of sales bookings, Subramanian said the company does not give annual guidance but it will be significant growth over the previous fiscal.
“We have demonstrated over the past several years that we know how to do strong launches. So, now it is a question of land acquisition, approvals and getting ready for launch. As long as we are able to address that and keep moving that pipeline, I think the numbers will happen,” he observed.
On new launches, Subramanian said three new projects/new phases of existing projects have been launched so far this fiscal in Bengaluru, Pune and Gurugram.
The company has plans to launch new projects or new phases in Chennai, Pune and Mumbai this fiscal year.
Mahindra Lifespace development footprint spans 32.14 million square feet of completed, ongoing and forthcoming residential projects across seven Indian cities.
The company also has over 5,000 acres of ongoing and forthcoming projects under development/management at its integrated industrial parks across four locations.
Mahindra Lifespace Developers reported a consolidated net profit of Rs 75.70 crore in the first quarter of this fiscal year. The company had posted a net loss of Rs 14.04 crore in the year-ago period.
The total income fell to Rs 117.34 crore during the April-June quarter of the 2022-23 fiscal from Rs 154.20 crore in the year-ago period. Its share price closed at Rs 537.65 apiece on Friday, while market cap was Rs 8,309 crore.
Housing sales have revived significantly after the second wave of the Covid pandemic. The demand is shifting towards credible developers who have financial bandwith to develop projects on time.
All big listed developers have reported strong sales bookings in the last financial year and also the first quarter of this fiscal. The full year guidance for FY23 of most of the players are higher, despite increase in interest on home loans.
Real estate consultants are of the view that housing sales in 2022 calendar year would breach the 2019 pre-pandemic level.
