Meet the ₹12,000-crore home sales club | Mint - Mint
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The demolition of Supertech Ltd’s illegal twin towers in Noida last year was symbolic. As the towers were reduced to rubble, you couldn’t help but wonder if this was the lowest point in India’s real estate sector where, for well over a decade, many developers took the country’s middle class for a ride.
But it was also a fresh start. It signalled a clean-up. In fact, that clean-up started post the pandemic. Land buying and project launches were rationalized; stronger developers took over the weak; home buyers returned; speculators nearly disappeared. Developers across 60 cities sold 413,000 units in 2022-23, compared to 361,000 units the previous year, Liases Foras Real Estate Rating & Research stated.
And now, for the first time, four real estate companies—Gurugram-based DLF Ltd, Bengaluru-based Prestige Group, Mumbai-based Godrej Properties Ltd and Macrotech Developers Ltd—clocked bookings of over ₹12,000 crore each in 2022-23. That’s a milestone for the sector.
DLF led the pack with ₹15,058 crore of sales. The four developers surpassed their annual guidance by a wide margin. They were able to sense the demand shift towards the premium segment post the pandemic and launched projects to meet this need.
“It is a new benchmark in the real estate sector, particularly in a scenario when interest rates kept going up," Santhosh Kumar, vice chairman at property advisory Anarock Group, said. “Customers chose to buy into grade A developers, who have a delivery record and financial bandwidth to sustain challenges," he added. In a difficult market like the national capital region (NCR), Godrej, for instance, has been buying land aggressively and selling, banking on customer trust.
The big question: can they sustain the sales momentum this year? Or was 2022-23 a blip?
Before we answer that, let’s look at what drove the bookings. Every company had their winning strategy but overall, those in the ₹12,000 crore club adopted an aggressive marketing approach, going after the wealthy across India and the world. Of course, they tweaked and customized their play depending on where they launched the projects.
By the December quarter, DLF, India’s largest developer by market value, had achieved ₹6,599 crore worth of sales bookings. It was well-poised to meet its ₹8,000 crore guidance for 2022-23. But, then, the company sprung a surprise.
In the last quarter of the year, it launched The Arbour, a 25-acre luxury project in Gurugram’s Sector 63. Its 1,137 apartments were sold off in days, ringing in over ₹8,000 crore of bookings. DLF’s sales shot up to ₹15,058 crore, leaving even the company overwhelmed. In retrospect, from an investor’s perspective, the company under promised and over-delivered.
DLF’s stock price closed at ₹485.70 on 19 June. The shares hit a multi-year high on 15 June ( ₹508.75). A year back, on 20 June 2022, the shares had hit a 52-week low of ₹294.70.
Aakash Ohri, group chief executive director and chief business officer at DLF, said that many factors played a role.
The Arbour was hyped—it was the first high-rise housing project the developer launched in Gurugram after a decade. Its pricing, at ₹17,800 per sq ft, was about 20% higher than the market rate. But homebuyers still lapped it up.
In its March quarter analyst call, DLF mentioned “seeding" and “connecting" with potential buyers and existing homeowners. That must have worked. The company has been actively marketing its projects to non-resident Indians (NRIs) in recent months. The contribution from NRIs, spread across the US, Middle East and Southeast Asia, to overall sales, was over 15%.
“For people who bought at The Arbour, particularly from other cities, it was like buying a blue-chip share," said Ohri. “Many wanted to buy multiple apartments. But unless they got very lucky, most could not make that cut," he added.
DLF also sold all the 292 homes at The Grove, another luxury project in Gurugram, within days of its launch in 2022, for ₹1,870 crore. It made about ₹1,150 crore from a luxury project in Chandigarh and ₹1,075 crore from the sale of independent floors at New Gurugram.
The going was not this good always. India’s real estate sector plunged into a crisis around 2017. DLF could garner only ₹1,000 crore of residential sales in 2016-17. The company focussed more on the office business to counter the slowdown in residential sales. Over the next few years, it cleaned up its portfolio and consolidated operations—it either sold or exited projects in smaller markets, in cities such as Lucknow, Panchkula, Indore and Chennai.
Now that the company is back on the growth track in the residential space, Ohri appears elated. “A phenomenal number of new sales came from existing customers and through reference of friends and family. It was the goodwill of many years," he said.
Unlike DLF, Prestige Group had sought to achieve ₹12,000 crore as its residential sales guidance for 2022-23. It ended up with sales of ₹12,931 crore during the year, up 25% from the previous year. It sold about 9,900 units, or 27 units every day!
Prestige attributes the uptick in sales to three key factors—post-covid consolidation that saw homebuyers moving towards developers who delivered, the right locations and right pricing. “We had to tick all the three boxes to gain customer confidence. We also treated the business as a commodity and delivered at scale," Irfan Razack, chairman and managing director of the company, said.
After operating in Bengaluru for over 30 years, Prestige expanded to Mumbai. Here, it had to educate both buyers and channel partners about the brand. It wasn’t easy. The company flew down a large number of brokers from Mumbai to Bengaluru to show the company’s projects in the city—among them were UB City, Bengaluru’s high-end retail and hospitality destination, and Prestige Shantiniketan, the first gated community the company developed.
In Mumbai, Prestige took over a stuck project from the Aristo Group in Mulund, relaunching it as Prestige City. Of the company’s ₹2,700 crore sales from Mumbai in 2022-23, a significant part was generated from the Mulund project.
Razack believes his factory approach to real estate will keep the company going even this year. With three new launches in Mumbai coming up, it aims to double the sales from the city.
Last year, Abhishek Ghosh, an engineer working with a consumer electronics multinational, moved into a 2,600 sq. ft apartment at Godrej United, in Bengaluru’s Whitefield neighbourhood. “We liked the quality and design over other projects. The cost was a bit high for us, so the company made certain adjustments in price. We said we didn’t want freebies like two air-conditioners they were offering," Ghosh said. He paid ₹2.1 crore for the three-bedroom apartment and was one of the last buyers in the project.
For Godrej Properties, growth isn’t just linked to new launches. It is also because of brisk sales of residual inventory in older projects, like in the case of Godrej United. The company calls it “sustenance sales". The developer employs new marketing campaigns to push such sales, one that secures better pricing and profitability. Older projects can be ‘ready-to-move-in’ and thereby, are typically priced higher.
“Besides new launches, we focused on sustenance inventory. Such sales can make a great difference," managing director and CEO of Godrej Properties Gaurav Pandey said.
In 2022-23, the company sold 12,631 homes, with total booking value growing 56% to ₹12,232 crore. It beat its annual sales guidance by 22%.
If the steady consolidation in the real estate sector is taken into account, Godrej Properties has been one of its biggest beneficiaries. The Mumbai-based developer’s market share expanded to 8% in 2022 from 2% in 2016, as per a Motilal Oswal report. Among listed developers, the company probably has the most distributed project profile, across NCR, Mumbai, Bengaluru and Pune. It also sells plots in non-metro cities.
How does it pull off the pan-India approach?
Godrej Properties has designated zonal CEOs. Every project is like an operating unit, with a project director and a leadership team to monitor profitability, customer satisfaction, and other quality metrics throughout the project lifecycle.
“…We believe this is the only way to build a sustainable long-term business and is a unique model pioneered by us," Pandey said.
In March, family members of industrialist JP Taparia, founder of reproductive healthcare company Famy Care, bought a triplex for ₹369 crore in Lodha Malabar, an under-construction luxury tower in Mumbai’s Walkeshwar Road. That’s one of the most expensive residential property deals in India, real estate experts said.
Other big deals were reported from the same project. Niraj Bajaj, chairman of Bajaj Auto, bought a triplex penthouse for ₹252.50 crore. And the directors of Kandoi Fabrics, a manufacturer and exporter of packaging fabrics, bought four sea-view apartments for more than ₹217 crore.
Lodha Malabar, which promises “palatial living", is being developed by Macrotech Developers. The project crossed the ₹1,000 crore sales mark last year and, overall, the company recorded it best ever sales of ₹12,064 crore in 2022-23.
Though high margin, luxury projects remain a key part of Macrotech’s portfolio, it also sells homes across various price points, in Mumbai and Pune. “We have units at every price point, from an entry level of ₹50 lakh, giving customers a wide range to choose from," said chief sales officer Prashant Bindal. “We also increased prices in a phased manner, which worked well. The rising interest rates impacted bottom of the pyramid buyers, but once rates stabilize, the momentum will return," he added.
Like DLF, Macrotech saw a jump in NRI sales. Blue-collar workers from the Middle East invested in ₹50-60 lakh homes; white-collar professionals from Kuwait, Qatar, the US and Singapore picked up houses worth ₹1 crore and more.
The developer’s main focus is Mumbai—it is penetrating deeper into smaller micro-markets with a ‘supermarket’ strategy. Here, it wants to build Lodha-branded housing projects every two-four km, suited to customers in that neighbourhood.
While the going is good for the big four, the question is if they can sustain the sales.
The targets are different for each company. While DLF expects bookings to dip in 2023-24 to about ₹12,000 crore, rest of the three see sales jumping. Godrej Properties expects a growth of nearly 15%; Macrotech about 20% and Prestige 25%.
Such high targets are achievable on the back of strong demand and an aggressive launch pipeline, analysts said. Nonetheless, there are concerns.
“If they go for double digit price rise, that could be a problem," said Adhidev Chattopadhyay, vice president of equity research, real estate & hotels, ICICI Securities. Then, in real estate, you never rule out regional headwinds—DLF and Macrotech have a huge single market exposure. And global headwinds can turn off the NRI investment tap.
Such irritants apart, the trend is clear. The big will garner more and more share from the small. “Today, 60% of the launches are by large, reputed developers and we are all growing at the cost of someone else because of consolidation," Venkat K. Narayana, CEO of Prestige Group, said.
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But it was also a fresh start. It signalled a clean-up. In fact, that clean-up started post the pandemic. Land buying and project launches were rationalized; stronger developers took over the weak; home buyers returned; speculators nearly disappeared. Developers across 60 cities sold 413,000 units in 2022-23, compared to 361,000 units the previous year, Liases Foras Real Estate Rating & Research stated.
And now, for the first time, four real estate companies—Gurugram-based DLF Ltd, Bengaluru-based Prestige Group, Mumbai-based Godrej Properties Ltd and Macrotech Developers Ltd—clocked bookings of over ₹12,000 crore each in 2022-23. That’s a milestone for the sector.
DLF led the pack with ₹15,058 crore of sales. The four developers surpassed their annual guidance by a wide margin. They were able to sense the demand shift towards the premium segment post the pandemic and launched projects to meet this need.
“It is a new benchmark in the real estate sector, particularly in a scenario when interest rates kept going up," Santhosh Kumar, vice chairman at property advisory Anarock Group, said. “Customers chose to buy into grade A developers, who have a delivery record and financial bandwidth to sustain challenges," he added. In a difficult market like the national capital region (NCR), Godrej, for instance, has been buying land aggressively and selling, banking on customer trust.
The big question: can they sustain the sales momentum this year? Or was 2022-23 a blip?
Before we answer that, let’s look at what drove the bookings. Every company had their winning strategy but overall, those in the ₹12,000 crore club adopted an aggressive marketing approach, going after the wealthy across India and the world. Of course, they tweaked and customized their play depending on where they launched the projects.
DLF’s blue chip
By the December quarter, DLF, India’s largest developer by market value, had achieved ₹6,599 crore worth of sales bookings. It was well-poised to meet its ₹8,000 crore guidance for 2022-23. But, then, the company sprung a surprise.
In the last quarter of the year, it launched The Arbour, a 25-acre luxury project in Gurugram’s Sector 63. Its 1,137 apartments were sold off in days, ringing in over ₹8,000 crore of bookings. DLF’s sales shot up to ₹15,058 crore, leaving even the company overwhelmed. In retrospect, from an investor’s perspective, the company under promised and over-delivered.
DLF’s stock price closed at ₹485.70 on 19 June. The shares hit a multi-year high on 15 June ( ₹508.75). A year back, on 20 June 2022, the shares had hit a 52-week low of ₹294.70.
Aakash Ohri, group chief executive director and chief business officer at DLF, said that many factors played a role.
The Arbour was hyped—it was the first high-rise housing project the developer launched in Gurugram after a decade. Its pricing, at ₹17,800 per sq ft, was about 20% higher than the market rate. But homebuyers still lapped it up.
In its March quarter analyst call, DLF mentioned “seeding" and “connecting" with potential buyers and existing homeowners. That must have worked. The company has been actively marketing its projects to non-resident Indians (NRIs) in recent months. The contribution from NRIs, spread across the US, Middle East and Southeast Asia, to overall sales, was over 15%.
“For people who bought at The Arbour, particularly from other cities, it was like buying a blue-chip share," said Ohri. “Many wanted to buy multiple apartments. But unless they got very lucky, most could not make that cut," he added.
DLF also sold all the 292 homes at The Grove, another luxury project in Gurugram, within days of its launch in 2022, for ₹1,870 crore. It made about ₹1,150 crore from a luxury project in Chandigarh and ₹1,075 crore from the sale of independent floors at New Gurugram.
The going was not this good always. India’s real estate sector plunged into a crisis around 2017. DLF could garner only ₹1,000 crore of residential sales in 2016-17. The company focussed more on the office business to counter the slowdown in residential sales. Over the next few years, it cleaned up its portfolio and consolidated operations—it either sold or exited projects in smaller markets, in cities such as Lucknow, Panchkula, Indore and Chennai.
Now that the company is back on the growth track in the residential space, Ohri appears elated. “A phenomenal number of new sales came from existing customers and through reference of friends and family. It was the goodwill of many years," he said.
Prestige’s Mumbai dreams
Unlike DLF, Prestige Group had sought to achieve ₹12,000 crore as its residential sales guidance for 2022-23. It ended up with sales of ₹12,931 crore during the year, up 25% from the previous year. It sold about 9,900 units, or 27 units every day!
Prestige attributes the uptick in sales to three key factors—post-covid consolidation that saw homebuyers moving towards developers who delivered, the right locations and right pricing. “We had to tick all the three boxes to gain customer confidence. We also treated the business as a commodity and delivered at scale," Irfan Razack, chairman and managing director of the company, said.
After operating in Bengaluru for over 30 years, Prestige expanded to Mumbai. Here, it had to educate both buyers and channel partners about the brand. It wasn’t easy. The company flew down a large number of brokers from Mumbai to Bengaluru to show the company’s projects in the city—among them were UB City, Bengaluru’s high-end retail and hospitality destination, and Prestige Shantiniketan, the first gated community the company developed.
In Mumbai, Prestige took over a stuck project from the Aristo Group in Mulund, relaunching it as Prestige City. Of the company’s ₹2,700 crore sales from Mumbai in 2022-23, a significant part was generated from the Mulund project.
Razack believes his factory approach to real estate will keep the company going even this year. With three new launches in Mumbai coming up, it aims to double the sales from the city.
Godrej’s sustenance
Last year, Abhishek Ghosh, an engineer working with a consumer electronics multinational, moved into a 2,600 sq. ft apartment at Godrej United, in Bengaluru’s Whitefield neighbourhood. “We liked the quality and design over other projects. The cost was a bit high for us, so the company made certain adjustments in price. We said we didn’t want freebies like two air-conditioners they were offering," Ghosh said. He paid ₹2.1 crore for the three-bedroom apartment and was one of the last buyers in the project.
For Godrej Properties, growth isn’t just linked to new launches. It is also because of brisk sales of residual inventory in older projects, like in the case of Godrej United. The company calls it “sustenance sales". The developer employs new marketing campaigns to push such sales, one that secures better pricing and profitability. Older projects can be ‘ready-to-move-in’ and thereby, are typically priced higher.
“Besides new launches, we focused on sustenance inventory. Such sales can make a great difference," managing director and CEO of Godrej Properties Gaurav Pandey said.
In 2022-23, the company sold 12,631 homes, with total booking value growing 56% to ₹12,232 crore. It beat its annual sales guidance by 22%.
If the steady consolidation in the real estate sector is taken into account, Godrej Properties has been one of its biggest beneficiaries. The Mumbai-based developer’s market share expanded to 8% in 2022 from 2% in 2016, as per a Motilal Oswal report. Among listed developers, the company probably has the most distributed project profile, across NCR, Mumbai, Bengaluru and Pune. It also sells plots in non-metro cities.
How does it pull off the pan-India approach?
Godrej Properties has designated zonal CEOs. Every project is like an operating unit, with a project director and a leadership team to monitor profitability, customer satisfaction, and other quality metrics throughout the project lifecycle.
“…We believe this is the only way to build a sustainable long-term business and is a unique model pioneered by us," Pandey said.
Macrotech’s palaces
In March, family members of industrialist JP Taparia, founder of reproductive healthcare company Famy Care, bought a triplex for ₹369 crore in Lodha Malabar, an under-construction luxury tower in Mumbai’s Walkeshwar Road. That’s one of the most expensive residential property deals in India, real estate experts said.
Other big deals were reported from the same project. Niraj Bajaj, chairman of Bajaj Auto, bought a triplex penthouse for ₹252.50 crore. And the directors of Kandoi Fabrics, a manufacturer and exporter of packaging fabrics, bought four sea-view apartments for more than ₹217 crore.
Lodha Malabar, which promises “palatial living", is being developed by Macrotech Developers. The project crossed the ₹1,000 crore sales mark last year and, overall, the company recorded it best ever sales of ₹12,064 crore in 2022-23.
Though high margin, luxury projects remain a key part of Macrotech’s portfolio, it also sells homes across various price points, in Mumbai and Pune. “We have units at every price point, from an entry level of ₹50 lakh, giving customers a wide range to choose from," said chief sales officer Prashant Bindal. “We also increased prices in a phased manner, which worked well. The rising interest rates impacted bottom of the pyramid buyers, but once rates stabilize, the momentum will return," he added.
Like DLF, Macrotech saw a jump in NRI sales. Blue-collar workers from the Middle East invested in ₹50-60 lakh homes; white-collar professionals from Kuwait, Qatar, the US and Singapore picked up houses worth ₹1 crore and more.
The developer’s main focus is Mumbai—it is penetrating deeper into smaller micro-markets with a ‘supermarket’ strategy. Here, it wants to build Lodha-branded housing projects every two-four km, suited to customers in that neighbourhood.
Will it continue?
While the going is good for the big four, the question is if they can sustain the sales.
The targets are different for each company. While DLF expects bookings to dip in 2023-24 to about ₹12,000 crore, rest of the three see sales jumping. Godrej Properties expects a growth of nearly 15%; Macrotech about 20% and Prestige 25%.
Such high targets are achievable on the back of strong demand and an aggressive launch pipeline, analysts said. Nonetheless, there are concerns.
“If they go for double digit price rise, that could be a problem," said Adhidev Chattopadhyay, vice president of equity research, real estate & hotels, ICICI Securities. Then, in real estate, you never rule out regional headwinds—DLF and Macrotech have a huge single market exposure. And global headwinds can turn off the NRI investment tap.
Such irritants apart, the trend is clear. The big will garner more and more share from the small. “Today, 60% of the launches are by large, reputed developers and we are all growing at the cost of someone else because of consolidation," Venkat K. Narayana, CEO of Prestige Group, said.
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