Housing redevelopment hype a cause for concern, says Raymond CMD Singhania

In an interaction with Moneycontrol, Gautam Singhania said that the company's focus will remain redevelopment projects, although it may look at land parcels in Mumbai at attractive valuations.

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26 Aug, 2025 12:21

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The growing trend of real estate redevelopment in Mumbai is driving a sharper-than-normal rise in rental rates, according to Gautam Singhania, Chairman and Managing Director, Raymond Ltd. He warned that this could disrupt the market, with thousands of people seeking temporary rental housing during reconstruction, and developers overbidding to secure such projects. Singhania emphasised that while the realty market will remain active, it is crucial to have the right product at the right price for sustainable growth, even as concerns about a potential downcycle persist.

"This redevelopment hype is a cause for concern. Where will so many people stay, and what will that  do to the rental market? These are challenges, but we will address it when the time comes. We have already seen rents go up by 30 percent in Mumbai," Singhania said in an interaction with Moneycontrol.

He was optimistic about real estate demand in Mumbai, and said that a new and stable state government led by Chief Minister Devendra Fadnavis augurs well for the city's infrastructure development.

Over the next few years, Raymond's real estate arm, Raymond Realty, has a largely redevelopment-led growth trajectory, and has signed on societies in areas such as Bandra, Sion, Mahim, etc. The company is also monetising its large land parcel at Pokhran Road, Thane, where it is developing around 4 million square feet of residential space.

Raymond Realty is currently in the process of being demerged from Raymond Ltd and listed as a separate entity. The parent company has received approval from the Securities and Exchange Board of India (SEBI) for the demerger, and has now applied to the National Company Law Tribunal (NCLT) for the same. Singhania said that Raymond Ltd will start reporting its finances without its realty operations sometime in June 2025, with Raymond Realty expected to be listed separately on the bourses in August 2025.

As for Raymond Realty's growth plans, Singhania outlined a 20 percent increase in the company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) every year, as well as growth of around 15 percent in its topline. Besides its focus on the Mumbai metropolitan region market, Raymond Realty plans to enter Pune as well, although Singhania added that the company is still looking out for an ideal land parcel there.

The company has targeted what it calls the `affordable luxury' segment, with  1 to 5 BHK apartments under three distinct brands — TenX, Address by GS, and Invictus by GS. Projects with 1 and 2 BHK flats are housed under TenX, while larger apartments are generally categorised as one of the other two brands.

Singhania said that the group's approach to redevelopment is `conservative,' adding that Raymond Realty has let go of projects in which he felt  the company had to bid too much, including in key markets such as Breach Candy in the island city. He said that with large developers chasing the same redevelopment projects, homeowners have been promised the world, which is why some developers may be forced to bid big in order to secure these opportunities.

According to developers in Mumbai, while they typically provide 35-50 percent more space to existing homeowners in redeveloped housing societies, high demand and a shortage of land in key micro markets has led some developers to provide homes up to 100 percent larger than existing tenements, especially in the western suburbs, in order to secure deals. Besides, developers need to pay the transit rent (rent for existing homeowners while the building is being rebuilt) and a corpus for the upkeep of the redeveloped building.

Singhania said Raymond Realty still has around 7 million square feet of residential real estate left to monetise in its Thane land parcel, and while redevelopment will remain its focus, the company will keep its options open.

"We are pursuing redevelopment or joint development agreements, as it is an asset-light model. But if we get a piece of land at a very attractive valuation, we could always take a look at it," Singhania said.