Land deals double in last one year: Anarock

Land deals double in last one year: Anarock

26 May    Finance News

Real estate developers and other entities are back to buying land parcels, with 28 separate land deals transacted in just the first five months of 2022, cumulatively accounting for over 1,237 acres across the country. This has doubled in the last one year, as the January-June period of 2021 saw just 14 land deals for about 763 acres get completed.

It is not just the developers but also players with financial wherewithal who are eyeing prime land at key locations across India to deploy developments across real estate asset classes.

Some of the leading developers and entities who bought land parcels for residential developments include Godrej Properties, Oberoi Realty, Mahindra LifeSpaces, Gaurs Group, Birla Estates, Hetero Group, Microsoft, and Mapletree Logistics, among others.

Anarock Research shows that of the total transacted land, at least 18 deals accounting for 351 acres, are earmarked for multiple residential projects across cities.

Arvind Subramanian, managing director and CEO, Mahindra Lifespaces told FE that there has been a flurry of land deals, given the strong surge in demand from homebuyers, which started right after the first lockdown, and has particularly strengthened in the last nine months.

He also said that there is a lot of consolidation on the supply side as small landowners who had harboured the ambition of becoming developers themselves five years ago, are realising that it is not their area of expertise and are now looking at working with a developer.

However, the preference is towards more organised, corporate developers. “Landowners are also once bitten twice shy and have not had good experiences with local developers in the past where financial closures were not obtained and developments got stuck or never took off,” Subramanian said.

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On the pricing front, he said that though land prices are hardening, it is not as concerning as the upward spiral in construction costs. Mahindra Lifespaces has bought two land parcels of 11 acres in Pune and 9 acre in Kandivali — a suburb to the north of Mumbai. The company expects to start construction for residential projects on both parcels by March 2023, which will clock total sales of over Rs 4,000 crore.

Mumbai-based Runwal Developers has recently acquired a 20 acre land parcel in Thane, which is understood to have been bought at Rs 471 crore.

Sandeep Runwal, managing director, Runwal Developers said, “Real estate has had two good years of sales, so developers have liquidity and are looking at creating further inventory, which is driving land acquisitions. Land prices continue to remain firm, but there is a mix of assets available. It is dependent on location and condition of the land parcel, and there are stressed assets available as well.” He refused to comment on the transaction value of the land.

According to Anarock, of the 28 land deals, at least three deals for over 115 acres are proposed for data centres, while two deals for over 63 acres are for logistics and warehousing projects. At least four deals for over 108 acres are for mixed-used developments. A single, currently anonymous land deal for 600 acres has taken place in Hyderabad.

Hyderabad also remains highly buoyant with the most land transactions recorded in the southern city. Five separate deals for 715 acres accounted for over 59% of the total land transacted between January to date. Bengaluru saw three separate deals for a total of 140 acres earmarked for residential, mixed-use, and logistics developments. National Capital Region also sealed five separate deals accounting for 9% of the total land deals in this period with approximately 106.3 acres. This includes two deals for a total of 91 acres in Gurugram, and one deal each in Delhi, Faridabad and Noida. The proposed developments include residential, mixed-use and warehousing.

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Pune witnessed five separate deals for over 91.1 acres of land, accounting for 7% of the total land area transacted pan-India. All are proposed for residential development. Meanwhile, land-starved MMR saw five deals involving 54.85 acres, all earmarked for residential developments.

Chennai saw one deal for 5.5 acres where a mixed-use development has been proposed.

In tier 2 & 3 cities, major deals included two deals of a total of six acres in Ahmedabad, one deal of over 58 acres in Nagpur and one deal was transacted in Sonipat for over 50 acres.

Anuj Puri, chairman, Anarock Group, said, “Land remains an important focus area for the sector post-Covid, with many well-capitalised developers and other entities sealing deals in the first five months of 2022. In comparison to H1 2021, the number of deals has doubled — from 14 deals in H1 2021 to 28 deals between January 2022 till date, and there is more than a month to go for the half-year mark. As expected, residential development remains the prime focus, given the robust housing demand that has lost little of its steam despite interest rate and property price hikes. However, these two factors may yet reflect in the momentum going forward.”

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