DLF, Lodha and Godrej Properties to target 2x sales in 3-4 years

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Even as top developers have hiked the prices in the past six months, they are confident enough to double their sales over the next three to four years. According to CLSA India Real Estate Access Day 2021 report, top developers such as DLF, Lodha (Macrotech Developers), Godrej Properties, Prestige Estates, Sunteck Realty and Mahindra Lifespaces are targeting 25-30% CAGR in sales.

“Top developers aim to double their sales over the next three to four years driven by new launches planned in FY22, 2x FY21’s, and industry consolidation (market share of the top 10 developers increased to 27 per cent in CY20 from 15-16 per cent in CY18-19). There are early signs of prices hikes of 5-10 per cent by a few well-reputed developers (eg DLF, Sobha, Mahindra) in the past six months, which have been absorbed by the market, indicating strong demand, especially for reputable developers,” the report noted.

The report further said that land prices and deal terms have not yet turned lucrative, but most developers believe that with no interest moratorium this year (for smaller developers), unlike last year, acquisition opportunities could be strong over the next 12-24 months.

“Developers such as Godrej, Lodha (N-R) and Mahindra (N-R) plan to spend significantly on new project acquisitions over the next two to three years. Sunteck, Prestige and Brigade (N-R), conversely, will be looking at JD/JV deals,” it said.

Outlook

Ram Raheja, Director, S Raheja Realty, pointed out that unlike the first wave, the recovery in demand for residential real estate has been faster in the second wave.

“All real estate segments, including luxury, mid-segment, and commercial properties are experiencing strong demand. This recovery can be attributed to factors such as a consistent demand in the large sizes properties and a higher flow of global PE funds ensured by good risk-adjusted returns by the sector. This swift recovery signals a revival in stability in the industry,” he said.

He sees fence-sitters to come out and invest, further increasing the demand for more dynamic layouts considering the new normal.