Shriram Properties to invest over Rs 400 crore this fiscal, shifts focus from affordable housing

Representative image.

Bengaluru-based listed real estate developer Shriram Properties Ltd (SPL) is planning to invest Rs 350-400 crore in the current fiscal, Group CEO Gopalakrishnan J told Moneycontrol in an interaction.

This aligns with the company's plan to clock Rs 250 crore profit by FY27, up from Rs 75 crore in FY24. The company also plans to triple its income to Rs 3,000 crore by FY27.

"We plan to grow at least 20 percent CAGR over the next few years. We are looking at 20 million sq ft (msf) of sales over the next three years in Bengaluru, Chennai, Pune, and Kolkata," Gopalakrishnan said.

Among that, about 7-8 msf of sales will come from Bengaluru, about 5-6 msf from Chennai and the rest from Pune and Kolkata.

Gopalakrishnan added that, post-RERA, cities like Bengaluru have seen a growth of 7-8 percent year on year (YoY) while neighbouring Chennai is growing at a steady 5 percent annually.

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Cumulatively, the selling price for the group has gone up by at least 35 percent over the last three years, due to an increase in raw material costs and overall inflation.

Currently, SPL has a project pipeline of 42 projects with 42 msf development potential. Of this, 24 msf is ongoing and the remaining 18 msf of development potential vests in future projects. SPL is targeting to double this future project inventory in 18-24 months.

Kolkata is still the affordable market

Gopalakrishnan added that among all cities, Kolkata remains one of the most affordable markets with residential prices of Rs 4,000 per sq ft or a ticket size of Rs 45-50 lakh.

Currently, the company has about 30 msf approved for development in the city. Out of this, the company plans to develop about 10 msf on its own without any joint development. SPL hopes to sell out the developments within the next 3-4 years.

Plotted development demand skyrocketing

Gopalakrishnan said that plotted development is seeing a massive surge in demand in cities like Bengaluru and Chennai.

In places like Doddaballapur, in the outskirts of Bengaluru, plotted development is selling at about Rs 4,000 per sq ft, up from Rs 2,500 per sq ft just a few years back.

"Previously, people did not invest in plotted developments due to the complications in land titles. However, after RERA, the segment has skyrocketed and needs to slow down in terms of demand," Gopalakrishnan said.

Shifting focus from affordable housing

In November 2023, Moneycontrol reported that for all the deliveries in H2FY24, the company is looking at 40 percent to be in the affordable segment (of less than Rs 50 lakh ticket size).

However, out of 3.5 million sq ft to be delivered in FY25, about 1 million sq ft will be in the affordable segment. "Though there is booming demand for affordable houses in India, a lack of policies and government incentives continue to be a challenge for the developers," according to Murali Malayappan, Chairman & Managing Director, SPL.

This hints at a changing focus of the company's affordable housing segment with a renewed approach to mid-segment housing. SPL said it aims to achieve leadership in this segment over the next decade.