Cautious but confident, says DLF management as it prepares for Mumbai re-entry

DLF's Camellias ultra-luxury development in Gurugram's DLF Golf Links area

As Gurugram-based real estate giant DLF prepares for its re-entry into India's largest housing market, Mumbai, this year, after a botched attempt more than a decade back, the company's management says it is confident, but cautious.

DLF has partnered with the Trident Group for setting up what its calls a 'premium' residential project through a slum redevelopment project in Andheri (West). The first phase of the project is expected to be launched on six acres of land.

This phase is expected to have around 9 lakh square feet of saleable area, while the total development potential of the plot is expected to be around 3.5 million square feet. The project has received most of the approvals, said sources. One from the Maharashtra Real Estate Regulatory Authority (MahaRERA) is pending.

Speaking to media persons in Gurugram, DLF's joint managing director and chief business officer Aakash Ohri said that despite market concerns about inventory buildup in some higher-priced categories, the company remains confident about its offering in Mumbai, while being a relative outsider to the Mumbai real estate market amid strong competitive intensity.

'Confident, but not over-confident'

"The market sees us differently, and we are not part of that ecosystem yet...Despite us being the market leader, we recognise that every market is different. We are confident, but we are not over-confident (about the Mumbai market). In the 3-4 sq km area near our project, there are 7,000-10,000 new homes coming up in the next few years. Everyone is our competition. To be cautious cannot be misconstrued to having a doubt," Ohri said.

Some brokerages and market observers have expressed concerns that the real estate cycle in the post-pandemic era may be headed for a peak, with sales momentum slowing in marquee projects in most markets, including in Mumbai. Ohri, however, noted that an inventory "glut", or moderating euphoria, may be part of a larger story.

"We are looking at it (inventory glut) as a product story...As for real estate euphoria, there are lots of reasons for euphoria in real estate to come about, and it is good to a point to propel the market, but it also has to come to a cruise. As it is, pricing for super luxury assets is inelastic. We have to tread the market cautiously, and we cannot be a maverick. Despite concerns over spending going down, residential assets remain a priority spend," said Ohri.

While DLF has consolidated its position in northern India, particularly through its premium, luxury, and ultra-luxury offerings in Gurugram, Mumbai's lucrative market has been on the company's radar for decades. The company also owned a large, 17-acre land parcel in south Mumbai's Worli.

Why did DLF leave Mumbai?

A debt crisis in the early 2010s forced the company to retreat from Mumbai, as well as other markets. It sold the Worli land parcel to Macrotech (Lodha Group) for around Rs 2,700 crore, on which now stands the Lodha Park .

Since then, the company's residential business has mainly focused on paring down debt, and has been developing large land parcels in Gurugram, the Chandigarh tri-city region, as well as Chennai.

In Gurugram, the company ramped up its ultra-luxury offerings, having delivered the large Camellias development in the Golf Links neighbourhood, and has soft-launched The Dahlias project in the same area, from which it expects a top line of more than Rs 30,000 crore, driven by sales to high net worth individuals and non-resident Indians (NRIs).

DLF has also re-entered the Delhi market with the premium One Midtown development in the Moti Nagar suburb in south-west Delhi. Ohri, while declining to elaborate on the ticket size of the upcoming Mumbai development, said that the One Midtown project is the closest template for the first phase of the Mumbai development, clarifying that it will not be a "super-luxury" development like the Camellias, where resales are being offered around Rs 2 lakh per square foot for large, bare-shell apartments.

Why a Mumbai suburb?

Asked as to why DLF chose a suburb in Mumbai for its re-entry, rather than a marquee project in a market like south Mumbai, Ohri said that Andheri is a "melting pot" of people from various cultural and professional backgrounds, like businesspeople, personalities from the entertainment industry, and other high net worth individuals.

"We have studied all markets in Mumbai, including south Mumbai. We are the most excited about the Andheri market. It is a melting pot, with a cosmopolitan setup, along with the infrastructure that is coming up, including the metro and the coastal road. A DLF property now is agnostic to geography. We have had people from Mumbai buying property in our Gurugram projects, as have people from Gujarat," he said.

Besides domestic sales, sales to NRIs have been a large driver by way of pre-sales and top line for DLF, with 24 percent of the company's FY24 revenue coming from sales to NRIs. Of the 173 apartments that DLF has pre-sold in its ultra-luxury Dahlias project, 13 percent has been to NRIs, with the company looking to more overseas markets, such as Australia, in order to increase sales velocity.

Ohri, however, added that the company would aim to keep the share of NRIs in the overall sales pie in the 25-30 percent range, in order to seek more domestic, end-user driven clients. It also expects investments from NRIs to head higher in the next five years.