Puravankara enters plotted development business, to invest Rs 825 crore

Realty firm Puravankara Ltd has entered into plotted development segment and will start six projects over the next 6-7 months with an investment of about Rs 825 crore, as it seeks to tap the rising demand of plots.

In an interview with PTI, Bengaluru-based Puravankara Ltd Managing Director Ashish R Puravankara said the company has created a separate brand and team 'Purva Land' to enter into plotted development segment.

To begin with, the company, a leading real estate firm in South and West India, will launch around 5.5 million sq ft area across six projects in Bengaluru, Chennai and Coimbatore where it will offer plots.

"We have created a new brand called 'Purva Land', which will focus on plotted development in the micro-markets where we have a presence," Ashish said.

The company will be launching six projects over the next six-seven months, he said.

Land parcels have already been tied up, while the design and approval process is on, Ashish added.

Out of six projects, three would be launched in Bengaluru, two in Chennai and one in Coimbatore. Land parcels for four projects are fully owned by the company, while two projects are in the joint venture.

Ashish mentioned that branded players, somehow, never looked at plotted development as an asset class but the situation has changed.

"We are seeing a section of buyers who prefers plots. Therefore we have created a separate brand and team to focus on this segment," he said.

The company sells luxury homes under 'Puravankara' brand and premium affordable housing under 'Provident' brand.

The total project cost for these six projects under 'Purva Land' is estimated at Rs 825 crore.

To expand the plotted development business, Puravankara is looking for more land parcels across various cities.

"We are in negotiation with landowners for joint development projects in the city of Pune, Mumbai and Hyderabad," Ashish said.

On the sales bookings, he said the company's performance has been "rocking" in the third quarter and the nine-month period ended December of the current fiscal and the momentum is likely to continue in the fourth quarter.

"In the last quarter, without any new launch, we have sold 0.91 million sq ft area from our ongoing sustenance projects which is the highest ever. In the nine months, we have done 2.42 million sq ft. So, by any stretch, it has been a fantastic sort of nine months," said Ashish.

He said the company revised the price upwards by 3-5 per cent in November.

"Pricing ability has come back and velocity has been very increasing. We will continue with our launch pipeline."

Ashish attributed the growth in sales numbers to huge consolidation in the residential real estate market towards branded and trusted developers.

He said there is a realisation amongst most prospective buyers, especially millenial, about the importance and security of owning a home.

Moreover, he said, interest rates on home loans are very low and supply has shrunk with lesser launches from big developers.

Ashish said the market share of branded developers is increasing.

According to an investor presentation, Puravankara Ltd's sales bookings rose by 42 per cent year-on-year to Rs 570 crore in the third quarter of this fiscal from Rs 402 crore in the year-ago period.

Sales bookings in volume terms increased by 40 per cent to 0.91 million sq ft in the October-December period of 2020-21 from 0.65 million sq ft in the corresponding period of the previous fiscal.

During the first nine months of 2020-21, sales bookings grew by 9 per cent to Rs 1,449 crore from Rs 1,334 crore in the same period a year ago.

"On a year to date basis, we have achieved sales of 2.42 million sq ft, up by 13 per cent YoY despite a much weaker Q1 FY21, indicating a strong rebound in the sector," the company said.

Housing sales were badly affected during the April-June period of this fiscal due to the nationwide lockdown to control the COVID-19 pandemic.

However, demand has been gradually recovering from July onwards.

Puravankara's net profit declined to Rs 13.32 crore in the third quarter of this fiscal from Rs 16.10 crore in the year-ago period.

The total income fell to Rs 303.82 crore during the October-December quarter of 2020-21 from Rs 528.11 crore earlier.

Its net debt fell to Rs 2,372 crore at the end of the December quarter from Rs 2,658 crore as of September 30, 2020.

Puravankara has completed 74 projects comprising 42.67 million square feet area and it is constructing another 22.01 million sq ft.

The company has projects in Bengaluru, Chennai, Hyderabad, Pune, Mumbai, Kochi, Goa, Kolkata, Coimbatore and Mangalore.