Latest news with #VijayAgrawal
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Business Standard
08-06-2025
- Business
- Business Standard
Non-Mumbai builders tap into financial capital via redevelopment projects
Real estate developers based outside of Mumbai such as Delhi-based DLF, Bengaluru-based Prestige Estates, Puravankara, Pune-based Blackstone-backed Kolte-Patil Developers, Vascon Engineers, and Hyderabad-based Ramky Estates, are foraying into India's largest real estate market through redevelopment projects. While Mumbai has always been India's prime real estate market, policy-level incentives for redevelopments, less capital intensive nature of redevelopment business amid a lack of open land parcels, is attracting developers that are using asset-light strategies to get better realisations from high property rates. 'For developers based outside the MMR, redevelopment offers an effective route to enter the Mumbai market, given the limited availability of greenfield land. Additional attractive factors include higher FSI allowances in slum rehabilitation and society redevelopment projects, which translate to better returns on investment,' said Siddharth Vasudevan, MD, Vascon Engineers. Mumbai's redevelopment market is big enough to accomodate more players like Bengaluru-based Sobha and Ahmedabad-based Arvind Smartspaces are evaluating opportunities. According to Credai-MCHI, over 25,000 buildings across MMR are eligible for redevelopment, with the total estimated project value exceeding Rs 30,000 crore. As per Anarock, as of 2024, average property prices in MMR stood at Rs 16,600 per sq ft, while those in Bengaluru and Hyderabad stood at Rs 8,380 per sq ft and Rs 7,300 per sq ft, respectively. The prices in NCR stood at Rs 7,550 per sq ft. Vijay Agrawal, MD- investment banking, Equirus said that the average margins in real estate are around 25-30 per cent but the Mumbai market is known for higher realisation per square foot, between Rs 25,000 and Rs 1 lakh. 'In other cities, general realisation is between Rs 5,000-12,000, except in a few micro markets. Higher realisations help developers disclose higher revenue with a smaller sales area. This helps in improving their blended per sq ft realisations.' In Mumbai, a developer can book revenue of Rs 500 crore for 1 lakh sq ft of a project with a sale price of Rs 50,000 per sq ft for one project. However, in other markets, a developer will need to sell 5 lakh sq ft of area at Rs 10,000 per sq ft to achieve the same revenue, Agrawal explained. 'Listed companies can meet their topline growth targets by executing projects in this market," Sanjay Daga, CEO and MD, Anex Advisory, said. But the bright opportunity has its challenges. Redevelopment for non-Mumbai developers involves multiple stakeholders, so having a reliable team in a new market in a must. Dealing with local tenants besides higher cost of approvals, construction in smaller area of sites compared to the other cities, are other issues to name a few. 'Developers fail to underwrite the working capital requirement in Mumbai projects. A typical project in other cities is between 5 to 15 acres, while Mumbai's typical project is 0.5 to 3 acres. Construction costs in Mumbai are very steep,' said an industry expert who didn't wish to be named. To overcome these hindrances, developers are forging joint ventures with local developers who already have the land or permissions, and industry experts who hold the ability to deal with the local administration and tenants more effectively. This helps in securing faster approvals and faster project launches. DLF, for its first Mumbai project, has tied up with Trident Realty, a local real estate firm. Prestige, for its mega redevelopment project in Bandra, has joined hands with Mumbai-based Valor Estate and RC Group. Despite strong balance sheets and deep expertise, building trust among buyers will take time. 'Local developers, due to their deep-rooted presence and familiarity with these intricacies, often have an edge,' Shrinivas Rao, CEO, Vestian.
Business Standard
09-05-2025
- Business
- Business Standard
Private equity, M&A drive 3x jump in real estate capital in FY25
Capital raising in India's real estate sector in the financial year 2025 (FY25) tripled to 17 deals raising ₹32,852.6 crore, from five deals raising ₹10,955.4 crore in FY24, according to Equirus Capital, a financial services firm. The sharp uptick was driven by a rise in private equity and M&A activity, both domestic and international, and an increase in average transaction value, the report stated. This boom in capital flows has been observed despite a decline in the secondary market performance of listed real estate stocks across large-, mid-, and small-cap segments—all of which underperformed the Sensex's 7.4 per cent gain over the same period. 'One of the bright spots in the market has been the real estate investment trusts (Reits), which outperformed with a 12.2 per cent return, underscoring their growing appeal,' said Vijay Agrawal, managing director, Equirus Capital. 'India's Reit and infrastructure investment trust (InvIT) markets have evolved from niche investments into core components of the country's real estate and infrastructure financing ecosystem.' Since FY20, cumulative fund mobilisations through Reits and InvITs have crossed ₹1.6 lakh crore, driven by their expanding asset base, robust institutional backing, and growing retail investor participation, the report by Equirus said. In the first month of FY26, the sector witnessed four deals worth $372 million, reflecting sustained investor confidence and appetite for real estate as an asset class, according to the report. The four deals featured Eldeco Group ($176 million), DLF Kolkata IT SEZ ($79 million), SAMHI Hotels ($88 million), and Zillion Hotels & Resorts ($29 million). 'This surge in capital raising highlights the sector's resilience, institutionalisation, and long-term growth potential, making it a focus area for PE funds, strategic investors, and capital market stakeholders alike,' added Agrawal.
