Puravankara, a Bengaluru-based real estate company, plans to develop 20 million square feet (msf) of residential property with a revenue potential of Rs 15,000 crore by the end of the next financial year, chief executive officer Abhishek Kapoor told Moneycontrol.
."The revenue potential is with the breakup of an average realisation of Rs 7,500 per square foot (sq. ft) from the launches done in the last nine months and the planned launches over the next five quarters," Kapoor said. “For the last nine months, the sale value is about Rs 2,100 crore.”
The company has already built 4 msf and will complete 2 msf by the end of the current financial year. It will add 14 msf in FY24 across Chennai, Bengaluru, Coimbatore, Kochi, Pune and Mumbai.|
“We are also looking at raising capital in the upcoming year to the tune of about Rs 1,000 crore,” Kapoor added.
Puravankara plans to add two plotted development projects and one residential project in Bengaluru and one plotted development in Chennai in this quarter.
“Next FY, we plan seven launches in Bengaluru, two in Kochi and Chennai, and one in Coimbatore and Pune,” he said.
Among the launches, about 45 percent will be in Bengaluru, 25 percent in Chennai, 16 percent in Kochi and the rest across other cities. Additionally, in Mumbai, the company is planning several redevelopment projects, including brownfield projects. Kapoor said on-ground work will start within a few months after the projects have been identified.
Plans for Bengaluru
Kapoor said Bengaluru holds the maximum revenue potential for its projects. “We will be developing about 7 msf in Bengaluru and the land for these projects has already been acquired," he said.
In Bengaluru, about 1 msf will be under the Puravankara brand, 3.5 msf in the affordable housing wing Provident Housing, and about 2.5 msf in Purva Land, the plotted development segment.
“We are currently in talks for multiple acquisitions in Bengaluru. Will announce them as and when they are finalised,” Kapoor added.
He mentioned Puravankara acquires land in three categories.
“On the outskirts of Bengaluru like in Kanakapura Road we can acquire land for Puravankara, a little away for Provident Housing, and further away land can be acquired for plotted developments,” he said. The mix allows developers to tackle the challenge of land availability and gives them the advantage of maintaining affordability, he said.
At present, Puravankara is looking at developments in the bracket size of 1 msf with a top line of Rs 1,200-1,750 crore, which Kapoor calls "a sweet spot" for the company.
He said Bengaluru is seeing a proactive development in terms of infrastructure, though much more is left to be done, especially on the outskirts.
In the Karnataka state budget for FY24, the government allocated Rs 9,698 crore for the “comprehensive development” of Bengaluru, with a major infrastructure push, including roads and highways.
Kapoor said the company's development outlook for FY24 will be completely different.
“This FY, we saw minimum development in the Provident Housing segment. However, in the next FY, a majority of launches are planned in that segment, between Rs 40-80 lakh,” he said.
However, Kapoor said the reason for the change in outlook could be the delay in obtaining approvals for projects. The launches lined up for FY24 include deferred projects and new launches, he added.
Puravankara shares have declined over 30 percent in the past year.
Interest rates
Interest rates
Speaking about rising interest rates, Kapoor said developers need to be mindful and watchful in terms of sustaining home affordability. The Reserve Bank of India has increased interest rates by 250 basis points since May 2022.
“Less than Rs 2 crore segment will continue to do well and the above Rs 10 crore segment will also do well as home loan interest hardly bothers them. The psychological tipping point will be when home loan rates cross about 9 percent,” he said.
In March 2022, Purva Asset Management, a subsidiary of Puravankara, launched a Rs 750 crore alternative investment fund to invest in affordable housing projects and plotted developments across projects in Bengaluru, Pune, Chennai, Hyderabad and the Mumbai Metropolitan Region.
Kapoor said it deployed Rs 93 crore to acquire land in Chennai for plotted development with a potential of 1.3 msf.
“We are looking to deploy about Rs 100 crore in the coming quarters and are in the process of another acquisition in Bengaluru for which the announcement will be made once complete,” he added.
In the commercial segment, the company currently has 3 msf under construction, to be completed over the next 30 months in Bengaluru – in the Kanakapura Road area and about 2.1 msf towards the airport road.
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