De­vel­op­ers shift fo­cus to plot­ted land de­vel­op­ment projects

Prospects of quick mon­e­ti­za­tion of land, faster sales pace, bet­ter cash flow gen­er­a­tion, and quicker ex­its from in­vest­ments are lead­ing real es­tate de­vel­op­ers to sell plots in­stead of build­ing apart­ments

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Mad­hurima Nandy mad­hurima.n@livemint.com

Shri­ram Prop­er­ties and In­fras­truc­ture Pvt. Ltd, House of Hi­ran an dani and The Ad­dress Mak­ers are ven­tur­ing into plot­ted land de­vel­op­ment projects, where they will sell small plots in­stead of apart­ments.

The ad­van­tages are many— quick mon­e­ti­za­tion of land, faster sales pace of plots than apart­ments, bet­ter cash flow gen­er­a­tion, and quicker ex­its from in­vest­ments com­pared to longer pe­ri­ods of con­struct­ing hous­ing projects.

Ben­galuru-based Shri­ram Prop­er­ties, part of the Shri­ram Group, is eye­ing plot­ted de­vel­op­ment as an emerg­ing busi­ness op­por­tu­nity, one that al­lows it to ex­pand its pres­ence across cities as well as ex­pand across cities in an op­por­tunis­tic way. It plans to sell plots in two lo­ca­tions in Ben­galuru, two in Chen­nai and one each in Visakha­p­at­nam and Coim­bat­ore.

“We are look­ing at it like a sep­a­rate busi­ness. A lot of de­vel­op­ers are mov­ing out of this busi­ness, many of them land ag­gre­ga­tors, and it cre­ates an

PLOTS ARE MORE AF­FORD­ABLE AND IT HELPS DE­VEL­OP­ERS CATER TO A WIDER SEG­MENT OF BUY­ERS

op­por­tu­nity for us in such times when cus­tomers want to only buy from es­tab­lished real es­tate brands,” said man­ag­ing di­rec­tor M. Mu­rali.

The firm will en­ter such projects through buy­ing the land or through de­vel­op­ment man­age­ment agree­ments with the landown­ers.

Last year, Go­drej Prop­er­ties Ltd had said that it was plan­ning to en­ter the plot­ted de­vel­op­ment space and build it as a sep­a­rate ver­ti­cal and as­set class.

House of Hi­ranan­dani, founded by Suren­dra Hi­ranan­dani, has cre­ated ‘Loft­line’, a brand that will fo­cus on plot­ted de­vel­op­ments and as­pi­ra­tional or more af­ford­able homes.

It re­cently launched a 4.28-acre project in Thaiyur, Chen­nai, with 66 plots on sale, priced at Rs25 lakh and above. “We ex­pect 20% of our rev­enue to come in from Loft­line. Plots are more af­ford­able and it helps us cater to a wider seg­ment of buy­ers. It’s a busi­ness that will give you higher vol­umes, if not mar­gins,” said Prashant Mirkar, vice-pres­i­dent (mar­ket­ing and sales), House of Hi­ranan­dani.

Plot sales also at­tract sig­nif­i­cance when home sales have been tepid for four years now. Even in such times, plot­ted de­vel­op­ments are seem­ingly far­ing bet­ter be­cause of af­ford­abil­ity and as many said, the In­dian in­vestors’ love for own­ing a piece of land. Khushru Ji­jina, man­ag­ing di­rec­tor, Piramal Fi­nance Ltd, said that the ra­tio­nale be­hind plot­ted de­vel­op­ments in­volves quicker mon­e­ti­za­tion of an as­set.

A plot­ted project can be com­pleted in a year or so, un­like villa or apart­ment projects that take mul­ti­ple years to be com­pleted. It also of­fers bet­ter in­ter­nal rate of re­turn for de­vel­op­ers, at­tracts higher in­vestor de­mand along with limited risks in project ex­e­cu­tion, as well as faster ap­provals, he said.

Piramal Fund Man­age­ment’s self-de­vel­op­ment arm, The Ad­dress Mak­ers, re­cently launched a plot­ted project in Ben­galuru and has two more in the pipe­line.

Many de­vel­op­ers who bought land parcels in lo­ca­tions as­sum­ing the area will get de­vel­oped were later proved wrong.

Many who planned apart­ments on a land par­cel fig­ured that it will be tough to sell them, and have switched to plots in­stead.

“Plot­ted de­vel­op­ment is a smart strat­egy in the cur­rent sce­nario. It is eas­ily the best way for de­vel­op­ers to liq­ui­date their land bank to­day,” said Ramesh Nair, chief ex­ec­u­tive and coun­try head, JLL In­dia.

Tata Hous­ing De­vel­op­ment Co. Ltd will also be launch­ing a plot­ted project on a 22-acre land par­cel in Chen­nai. “It’s close to an in­dus­trial area and apart­ments may not have worked. How­ever, we don’t have a planned strat­egy to do plots and will do them on a case-to-case ba­sis,” said cor­po­rate mar­ket­ing head Ra­jeeb Dash.

MINT/PHOTO

Plot­ted de­vel­op­ment al­lows de­vel­op­ers to ex­pand their pres­ence across cities in an op­por­tunis­tic way

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