Bengaluru-based developer Shriram Properties plans to complete 2.5 million square feet (msf) of development in the current financial year and at least 10 msf between FY23 and FY25. The company is also looking at foraying into Pune within the next 12 months.
M Murali, Chairman and Managing Director (CMD), Shriram Properties, told Moneycontrol, "As of June 30, 2022, we have completed 10 msf across 17 ongoing projects apart from 15 msf across 20 upcoming projects in Bengaluru and 19 msf across 32 projects in India."
Among the projects, the company completed 4 msf across three projects in Chennai, 0.9 msf across 4 projects in Coimbatore and 0.7 msf across 1 project in Vishakhapatnam.
Bengaluru plans
For Bengaluru, the company said the lands have been acquired and several projects are in pipeline. The projects will be coming up on Sarjapur Road, Mysore Road, Kanakapura Road and Bellary Road among several other places.
Murali said the company has six ongoing projects with 10.2 msf in the affordable segment across Bangalore, Chennai and Kolkata (two projects in each city), which will be delivered between FY23 and FY26. "The development will continue in Bangalore, Chennai and Kolkata while we complete and hand over the projects ongoing in Vizag and Shreshta, which are at an advanced stage of completion," he added.
The company has a presence in Bengaluru, Chennai, Hyderabad, Visakhapatnam and Kolkata. "However, we plan to foray into Pune within the next 12 months," Murali added.
He said the company is not looking forward to land banking but will continue projects in joint development. It is eyeing a revenue of Rs 2,600 crore on pre-sale values.
"On new project acquisition, we have about 50 million square feet in the pipeline across India. The paperwork is currently ongoing. Most of our investments happen out of internal accruals or third-party revenue platforms," he said.
Previously, the Real Estate Credit Opportunities Fund-I of the alternative asset manager Dalmia Nisus Finance Investment Managers LLP invested Rs 60 crore in two Shriram Properties-managed projects in the Bengaluru micro-markets of Sarjapur and Devanahalli.
These investments were made from the Rs 500 crore fund, which mostly funds structured credit and mezzanine deals in India's residential market.
Plans to stay in the affordable housing segment
Within the next three years, Shriram Properties is looking at a pre-sales volume of 5.5 msf, with 4.5 msf alone in the affordable housing segment by 2023.
Murali said, "Our expected sales volume for FY23 and FY24 is about 4.5 msf and 5.5 msf, respectively, with a sale value of around Rs 2,000 crore and Rs 2,400-2,500 crore for FY23 and FY24."
In the first quarter of FY23, the company earned 62 percent from affordable housing sales with Bengaluru having the highest selling value of 38 percent, followed by 33 percent in Kolkata and 29 percent in Chennai. Murali said he sees huge potential in the affordable market segment for the next 20 years and the company will continue to stay in that segment for long-term benefits.
"Year on year, our sales volume grew 20 percent and value grew 26 percent. While our collections grew 34 percent we spent 52 percent more on construction," Murali added.
Inflation, price increase concerns for affordable housing
Murali said, "The Indian government has played a huge role in controlling the prices of steel or cement amid the Ukraine-Russia war and growing inflation. Today, cost increase has flattened compared to pre-pandemic levels with the help of government intervention."
The company said prices of products have gone up across the board for the last three years. Murali sees prices rising at least 10 percent this year. "Currently, we are capping the apartments across affordable segment to Rs 5,000-Rs 6,000 per square foot. And for the luxury segment the prices start from Rs 2.5 crore and above," he added.
However, Murali added that saving has gone up among homebuyers. "After demonetisation, RERA has consolidated the entire sector. Especially after the pandemic, the supply is limited today balancing price inflation. The government has to keep the affordable housing segment incentivised to motivate the developers to provide more apartments in the segment," he added.
Following an increase in demand for the mid-market home segment, Shriram Properties intends to have no debt within the next 18 months, Murali added. Since its listing, the company has paid off Rs 200 crore of debt in addition to refinancing it in a joint venture this fiscal year.
Bengaluru flooding not a growing concern
Murali said, "Flooding is an issue across the globe. In places like Boston, the UK, and Europe floods continue to batter cities. However, not being prepared to deal with it is an issue. We are currently using old maps and drawings to plan the city layout. We need to create more lakes and waterways to control flooding. Additionally, we need recharge pits to control floods. Over the next 10 years, the city will keep driving demand for the real estate sector."
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