Brigade Group to develop 7.5 msf of residential space, invest Rs 2,700 crore

The upcoming infrastructure, including the metro and the proximity to the international airport has shifted a lot of residential demand towards north Bengaluru, said Brigade Groups's MD Pavitra Shankar.

Bengaluru-based real estate developer Brigade Group plans to launch development of 7.5 million square feet (msf) of residential space with a construction investment of Rs 2,700 crore in Bengaluru, Chennai, and Hyderabad, by the first quarter of FY24-25.

Speaking to Moneycontrol, Managing Director Pavitra Shankar said, "The upcoming developments will have about 11 housing projects, 90 percent of which will be in Bengaluru. We are expecting a margin of at least 20 percent from this pipeline."

Additionally, the company said that the residential pipeline will be much bigger if a 3 msf land parcel in Hyderabad's Kokapet that it acquired in last month (August 2023) is also included. However, it depends on how long it takes to design the project and get the necessary approvals.

"By the time we design and get approvals for new projects, it typically takes about 12-15 months," Shankar said.

Last year, the company launched 5.5 msf but sold 6 msf, including existing inventory.

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Also Read | Owner of Brigade Group buys property in Bengaluru for Rs 9.82 crore

Currently, the Brigade Group has a land bank of about 47 msf, of which 38 msf is in the residential segment. Additionally, about 20 msf is under construction.

Among the upcoming launches, she added, about 50 percent will be done in a joint development with the landowners.

Bullish on north Bengaluru

Shankar said that Bengaluru accounts for 33 msf of the 47 msf land bank. After Bengaluru, Chennai is the second largest market for Brigade, followed by Hyderabad.

She said that more than 70 percent of the launches in Bengaluru will be in the north of the city. "The upcoming infrastructure, including the metro and the proximity to the international airport has shifted a lot of residential demand towards the north. Though the eastern IT corridor of Whitefield remains a favoured choice, it is saturated and getting land is challenging there," Shankar said.

Eighty percent of the upcoming launches will be in the mid-income segment, with ticket sizes ranging between Rs 80 lakh to Rs 1.5 crore.

"Previously, the same segment was priced at Rs 60 lakh to Rs 1.3 crore. But customers have increased their price points. About two years back, the apartments we were selling at Rs 6,000 per square feet (psf) are today selling at Rs 8,000 psf," Shankar added.

The company said the share of luxury apartment launches has increased from 5 to 10 percent currently. In February, the company acquired a land parcel at Mount Road in Chennai for more than Rs 500 crore. Shankar added that the project will have luxury apartments costing upwards of Rs 6 crore.

Rising apartment costs

The Karnataka state government announced on September 19 that the guidance value may go up by 20-30 percent from October 1, 2023. However, it may go up by as much as 50 percent in dense IT corridors, Revenue Minister Krishna Byre Gowda had said.

Guidance value is the minimum value at which the sale of a property can be registered with the state government. It is also known as the circle rate in some states.

Hinting at an increase in apartment costs, Shankar added that the current demand is not just because of a looming increase in the guideline value. "There are several reasons for the real estate demand in Bengaluru today. The hike in general may be significant depending on how the guidance rates are changing," she added.

Currently, Brigade Group has a debt of Rs 3,800 crore. A majority of the debt is owing to the securitization of rental income from the leased office and retail portfolio, and operating hotels.

Previously, Brigade Group told Moneycontrol that the company will add about 2 msf of Grade A office space in Bengaluru by the end of the current financial year.

"We have a debt ratio of 0.5 percent. With the residential segment comprising 70 percent of our business, we believe our debt will remain stable over the next few quarters," she added.