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Shapoorji to roll out 80 mn sq ft housing projects in the next three years

Shapoorji Pallonji Real Estate, the property development arm of the Shapoorji Pallonji group, plans to offer myriad residential projects of 80 million square feet in the next three years. 

Experts said this is the highest volume of launch for any property developer in the country. “We will launch 25 million-30 million square feet each in the next three years and complete the projects in the next 6-7 years,” said Venkatesh Gopalkrishnan, chief executive of Shapoorji Pallonji Real Estate.

Of this, 20 million sq ft will be for the middle-income group (under Rs10 million), 40 million sq ft for the Rs10 million-Rs20 million category, 10 million sq ft for the Rs20 million-Rs30 million bracket and 10 million sq ft above the Rs30 million category. In comparison, DLF, the country’s largest developer, has started its 7 million sq ft residential project in central Delhi, which is a JV with Singaporean fund GIC. But DLF has already said it would complete the projects and then sell the units. However, Shapoorji sells apartments during construction of projects like most developers.

Gopalakrishnan said the company is looking at sales value of Rs60 billion in the current financial year, about Rs100 billion in the next financial year and around Rs150 billion by FY21. He said the company is expecting to collect Rs25 billion from customers in FY19, Rs45 billion in FY20 and Rs60 billion in FY21. When asked how SP Real Estate plans to sell property when markets are down, Gopalakrishnan said between April and October this financial year, it sold more than the previous financial year. “Markets are weak but they were worse earlier. After Real Estate Regulation & Development Act (RERA), buyers went in to buy apartments of trusted brands and it has helped corporate developers also,” he said. He added that the company has built a strong team to plan, execute, market and sell the projects.

Gopalakrishnan said once the political uncertainty goes away in the next one year, things would be better.

According to Anuj Puri, chairman of Anarock, despite the turmoil, the current market scenario does favour large and well-capitalised players who are also able to attract institutional funding. “Such players are able to not only sustain in the market right now but also plan for the future. Shapoorji Pallonji has proven time and again that it has a firm grasp of where the market is at any given time, and where it is headed,” he said.

According to Anarock Property Consultants, the absorption of homes in top seven cities went up by a mere 8 per cent in the first nine months of this year and  new launches have gone up 18 per cent. 

Puri said large national players catering to affordable housing — a category which most of them avoided in the past — is a now a fairly established market in reality. This is the most incentivised sector and also one with the highest demand. However, high-end housing has also been seeing a gradual revival, which is bound to strengthen over the next few years.

About 35 per cent are under ownership, 40 per cent in JVs, and 20 per cent in development management contracts. “Between 2012 and 2017, when the markets were soft, our entire focus was to build the pipeline to get the entitlements as well as approvals and take them to launch,” he said.During this period, it got into entitlements and JVs as prices were low. When markets picked up post 2016, they got into development management contracts where they get a fee for their services which are between 10 and 13 per cent of the sales. He said the company sees a fee potential of Rs40 billion. In addition to residential sales, Gopalakrishnan said the company is looking to sell land and completed assets. It is expecting to get around Rs20 billion through this.

It has already signed term sheets for 60 per cent of properties which will be monetised. 

Gopalakrishnan also said that the company will forge partnerships with equity investors for new asset classes such as warehousing, logistics and low-cost housing.

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