The boom in residential real estate, as well as the demand for warehousing space, is leading to more demand for land, and this has resulted in land transactions rising over 50 per cent annually this year with the volume of transactions crossing 2,300 acres.
There have been 75 land deals for over 2,310 acres in 2023 year to date, with September alone seeing 16 new deals being closed spanning over 292 acres, according to data provided by ANAROCK Research. This does not include the deal announced by Bombay Dyeing to sell a 22-acre land parcel in Mumbai to Japan’s Sumitomo for ₹5,200 crore. The deal is yet to be closed.
“Land acquisitions have witnessed an uptick in the past couple of quarters, on the back of strong activity in the residential sector,” said CBRE Research in its 2023 mid-year outlook.
A major factor driving land deals is to keep up the supply of housing stock which has been dwindling with the sales outstripping launches.
Top real estate developers in the top 7-8 cities have been seeing projects getting sold out as soon as they are launched. On Tuesday, Century Textiles and Industries said its real estate subsidiary, Birla Estates’ project in Bengaluru, saw 556 units being sold in 36 hours. Arvind SmartSpaces said today that it has sold out the entire inventory in a plotted development in Ahmedabad in just three days.
businessline had reported earlier this month that housing inventories are at an all-time low of only four quarters to sell.
“Buoyed by the momentum in housing sales this year, several developers [with the financial wherewithal] are closing land deals at prime or emerging locations across the country,” said Anuj Puri, Chairman and founder, ANAROCK group.
Large land deals are not restricted to major metro cities as Tier 2 cities are also seeing large transactions. Ahmedabad saw large-sized deals, one for 500 acres and another for 204 acres, in the current quarter. Arvind SmartSpaces was the buyer in both cases, the purpose being to build township projects.
Over 72 per cent of the land deals are for residential purposes, and that includes high rises, plotted developments, and townships. A few deals are for commercial projects, four separate deals for a hotel project, an industrial park, an IT park, and a large deal of 300 acres in Bengaluru, for a manufacturing project by Foxconn.
Godrej Properties has been one of the largest land acquirers over the last couple of years. In FY23 it acquired 18 land parcels with a total saleable area of 29 million square feet. Of these around five were added in the March quarter of 2023. In July-August it acquired a 7.9 acre land parcel in Gurgaon for around ₹900 crore.
The Mumbai Metropolitan Region, which is seeing extensive construction activity as well as good demand for homes, saw the highest number of land deals followed by the National Capital Region. The deal sizes were however smaller.
With almost all developers targeting a 20-25 per cent growth in their bookings in FY24, acquiring land and developing projects as fast as possible will be the only way to meet those targets.