Land deals to touch 3,000 acres in FY24 as developers buy up real estate
Land deals in India are set to touch 3,000 acres in FY24, up 59 per cent from last year, as real estate developers look to keep the launch momentum going.
Land deals for 2,258 acres was done in the first nine months of FY24, according to data provided by property consultant Anarock. Anecdotal evidence and exchange filings by listed developers tracked by businessline indicate that the momentum in land acquisition has kept pace and, another 600-700 acres could be added in the current quarter.
For instance, Godrej Properties has been on an acquisition spree in the March quarter, buying over 15 acres in Hyderabad for over ₹400 crore, and a 6.5-acre land parcel in Noida for ₹506 crore. It will develop a 62-acre township in Bengaluru in joint venture. Mahindra Lifespace recently acquired a 9.4-acre land parcel in Bengaluru.
Other players, listed as well as unlisted, have also been busy, according to Saurabh Rathi, managing director and co-head, Motilal Oswal Alternates. He added that transactions have gone up because of the availability of land parcels from corporates, government, and other landowners, as well as developers, especially in the Delhi-National Capital Region and the Mumbai Metropolitan Region. In the last two years, land transactions worth over ₹3,000 crore have been completed in Gurgaon alone.
The data from Anarock showed that a majority of the deals were transacted in the two major metro cities, while the two realty hotspots Hyderabad and Bengaluru were close behind.
Asset light to asset heavy
The shift towards land acquisitions began in the middle of 2022 and has continued since, said Rathi. During 2019 to 2021 and in the early months of 2022, developers entered joint development projects as they pursued an asset light model. There were plenty of landowners who wanted to monetise their real estate assets and smaller developers with projects that were stuck due to lack of funds.
Some joint development projects were successful, but many ran into problems over governance issues, revenue split and title deeds, forcing the larger developers to pull out.
“What we are seeing is developers coming back with the intent to undertake complete buyouts or buy out their erstwhile development partners,” Rathi said.
In 2023 a record 5.3 lakh units were sold, while new supply was at 4.5 lakh units. Anticipating volumes, real estate players are shoring up their land banks. The demand-supply gap has contributed to the pricing uptick.
Land availability
There is more land available now. Corporates are selling non-core land assets to monetise them. For instance, last year, Nusli Wadia-owned Bombay Dyeing sold a 22-acre land parcel in the centre of Mumbai for ₹5,200 crore to an arm of Sumitomo Realty. In December, Kansai Nerolac sold a 4.13-acre land parcel in Lower Parel to Runwal Developers for ₹726 crore. It had earlier sold a 24-acre plot in Thane to House of Hiranandani for ₹655 crore.
Local state authorities such as CIDCO in Maharashtra and the Haryana State Industrial and Infrastructure Development Corporation regularly auction plots for commercial and residential purposes.
Rathi said the unprecedented demand for land has pushed up prices. In Pune and MMR, the price per acre has jumped 50-60 per cent, while in Hyderabad land prices have doubled over the last two years.
He estimated the total transaction value in the range of ₹35,000-40,000 crore, compared to ₹25,000-30,000 crore two years back.