Focused on north, eyeing govt sale of key properties: Bharti Real Estate CEO Sayal

“We as a group are focused on the North of India and we will continue to be invested in the region, especially Delhi NCR in the near- to medium-term," Sayal said.

The company is also closely watching the government’s divestment plans of marquee properties at prime locations, which may include the sale of The Ashok Hotel in New Delhi.

The approach

The company has chosen to prioritize its local market when most real estate companies are pivoting to a pan-India approach. Competitors such as the Prestige Group, Delhi Land & Finance (DLF Ltd), and Godrej Properties, among others, have been on an expansion spree in new regions.

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Prestige Estates, the group’s real estate arm, has new projects spread across Hyderabad, Delhi-NCR, Goa, Bengaluru, Mumbai, Chennai and Kochi, according to news reports. Listed-real estate developer Godrej Properties is also planning to tap Tier II cities in southern India. The company has a strong presence in Bengaluru, Chennai and had entered Hyderabad earlier this year.

DLF is also foraying into new markets such as Mumbai and Goa, its chairman Rajiv Singh said in their FY23-24 annual report. “We continue to invest in the capex of our new build outs in Gurugram, Chennai, Delhi and Goa," Singh said.

While many are expanding beyond home markets, there are companies like Raymond, who also continue to focus on their home market of Mumbai.

Expansion plans

Bharti Real Estate’s current expansion plans in Delhi-NCR include building 17 million square feet (msf) of Global Business District at Worldmark Aerocity on land leased from Delhi Airport. Once completed, it will have a total outlay of nearly $2 billion, which will be funded through a mix of debt and equity, Sayal said.

The project will entail multiple phases. The delivery of phase two will begin from June next year and go on till the first quarter of 2027 calendar year. Work on the third phase will begin by the next financial year, with deliveries starting after 2027.

So far, the first phase has seen the development of 1.5 million square feet. The company has plans to build another 7 million square feet in phase two. Finally, the third phase will see construction of ~10 million square feet by 2030.

Sticking to the North

The Bharti group’s plan to stick to the North comes at a time when most markets are witnessing multi-year high property sales, except Delhi-NCR, which showed a 4% drop in sales, according to Knight Frank’s 2024 half-yearly report. It must be noted, however, that the first half of 2023 saw the highest sales in 11 years.

The Nation Capital Region’s primary residential market saw muted growth in the first half of 2024, with nearly 29,000 units sold during the period, which is sequentially lower than H1 2023 and H2 2023, the Knight Frank report said.

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“The successive growth in average residential prices in the past 2.5 years has started reflecting in the sales momentum," said the report. “Locations that were earlier within the homebuyers’ reach have become expensive due to lack of ready-to-move-in inventory and infrastructure upgrades."

For Bharti Real Estate, however, staying in their hometown might prove to be a great strategy.

“Developing within your home region offers a distinct advantage due to a deeper understanding of land-related issues, government policies, and other localized factors," said Pradeep Mishra, CMD at Oram Developments.

“While expanding beyond familiar territory can be a great strategy for developers to unlock new growth, it is best approached after achieving significant milestones in your core market," he said.

Developers can also explore Tier 1 and Tier 2 cities for expansion, or cautiously start with one or two projects.

Mishra added that there are examples of developers who struggled when venturing too far too soon.

Other real estate majors are capitalizing on the booming market elsewhere. Housing sales in Hyderabad touched a fresh high in H1 2024, with nearly 18,600 units sold during that time. Home sales in Mumbai also climbed to a 13-year high with approximately 47,000 units sold, 16% higher than the same period in the previous year.

This was fuelled by a premiumisation trend in the housing market. The number of residential units launched in the first half of 2024 reached a record high of nearly 160,000, with a 170% hike in the premium category (properties worth ₹3-5 crore) and 116% rise in luxury properties (costing above ₹5 crore), according to reports by JLL.

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In terms of office space, Bengaluru remained the largest, acing with the highest sales volumes, while cities like Mumbai and the National Capital Region also recorded their best half-yearly performances.

Commercial vs residential space

The pan-India demand for office spaces is likely to cross 70 msf in 2024 fuelled by strong economic fundamentals and significant push in investments into the country’s physical and digital infrastructure, according to Credai reports.

The country’s real estate sector is capitalizing on the growing demand for residential units and office spaces across the country. The rising confidence in the improving economic prospects has also spurred office occupiers to expand their operations in India, according to Knight Frank’s report.

“We can confidently anticipate that the Indian office market will conclude 2024 on a record high," the report said. "In the residential market, while the headline demand figures convey a narrative of resilient growth, the underlying components are undergoing significant changes."

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India's commercial real estate sector is also experiencing a boom, driven largely by global capability centers (GCCs).

The commercial market is valued at $40.71 billion and is expected to grow to $106.05 billion by 2029, with a compound annual growth rate (CAGR) of 21.1%, according to a July 2024 report by Assocham.

“Major developers with a pan-India presence will continue to dominate, setting new industry standards and leading to a more structured and competitive environment," said the report.