Plotted development projects offer better internal rate of returns for developers and attracts higher investor demand, with limited risks in project execution, a report in Mint business newspaper said.
Those leading this emerging segment are Tata Housing Development Co. Ltd, Shriram Properties and Infrastructure Pvt. Ltd, House of Hiranandani and The Address Makers.
Under this, developers will sell small plots instead of apartments. It results in quick monetization of land, faster sales pace of plots than apartments, better cash flow generation, and quicker exits from investments compared to longer periods of constructing housing projects.
Bengaluru-based Shriram Properties, part of the Shriram Group, is eyeing plotted development as an emerging business opportunity, one that allows it to expand its presence across cities as well as across cities in an opportunistic way. It plans to sell plots in two locations in Bengaluru, two in Chennai and one each in Visakhapatnam and Coimbatore.
“We are looking at it like a separate business,” said Managing Director M. Murali. “A lot of developers are moving out of this business, many of them land aggregators, and it creates an opportunity for us in such times when customers want to only buy from established real estate brands,” the Mint quoted him as saying.
The firm will enter such projects through buying the land or through development management agreements with the landowners.
House of Hiranandani has created ‘Loftline’, a brand that will focus on plotted developments and aspirational or more affordable homes. It recently launched a 4.28-acre project in Thaiyur, Chennai, with 66 plots on sale, priced at Rs2.5 million and above. “We expect 20% of our revenue to come in from Loftline,” said a company official.
Plot sales also attract significance when home sales have been tepid for four years now. Even in such times, plotted developments are seemingly faring better because of affordability and as many said, the Indian investors’ love for owning a piece of land, said Khushru Jijina, Managing Director, Piramal Finance Ltd.
“Plotted development is a smart strategy in the current scenario. It is easily the best way for developers to liquidate their land bank today,” said Ramesh Nair, CEO and Country Head, JLL India.