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Mahindra Lifespaces plans to acquire land parcels with sales potential of Rs 2,000 crore

It is also in talks with investment firms to set up a dedicated platform for development of mid-income housing projects

Realty firm, Mahindra Lifespaces, Land parcels, Arvind Subramanian, Development of mid-income housing projects, Mahindra Group, Co-living segment, Coronavirus pandemic, Labour shortages, Housing prices, Luxury residential properties, Mumbai Metropolitan Region, Pune, Bengaluru, HDFC Capital, Mahindra Happinest, Chennai, Jaipur, Mahindra World City, Shifting manufacturing base from China

Realty firm Mahindra Lifespaces is actively looking at acquiring four to seven land parcels this fiscal with sales potential of Rs 2,000 crore as land deals have become more attractive.

The company is also in talks with investment firms to set up a dedicated platform for development of mid-income housing projects, said Arvind Subramanian, MD and CEO-designate, Mahindra Lifespaces, which is part of the Mahindra Group.

He said the company is evaluating the possibility of integrating the co-living segment in its future projects.

Reflecting on the coronavirus pandemic’s overall impact on the housing market, Subramanian said demand will get deferred, but supply and project cash flows will be affected because of slow construction activities in view of labour shortages.

Housing prices in affordable and mid-incoming segments will not decline, with no room for any reduction, but rates for luxury residential properties may see a correction, he observed.

“I am quite bullish on demand. There will be a deferment of demand rather than contraction. With the opening of lockdown, the pent up demand will come to the market,” said Subramanian, who will take charge from July.

Already, he said, there has been an upsurge in enquiries from potential customers -- both who were looking for properties pre-Covid-19 and new ones.

Moreover, there have been requests from existing customers for upgradation to bigger apartments.

“Lockdown has precipitated the entire process of search and shortlisting of properties. Generally, people take 12-24 months to decide, but lockdown helped them crystallize their needs,” Subramanian said.

However, he said the overall sales have reduced and the volume of enquiries has dropped.

There would be a shake-out in the residential market but not on the basis of the size of a company, he said, adding that demand would gravitate towards trusted builders who manage their balance sheets better.

Talking about the operations of Mahindra Lifespaces, Subramanian said the company has a balanced portfolio, with presence in affordable and mid-income premium housing as well as large industrial cities.

He said the company is looking at land deals, both outright purchase and joint development, to strengthen portfolios in three cities where it is focusing -- Mumbai Metropolitan Region (MMR), Pune and Bengaluru.

The company has a strong balance sheet with cash reserves. It also has a funding platform with HDFC Capital for affordable housing, Subramanian said.

“Land acquisitions have become attractive. Landlords have become more flexible now. We are getting quite a lot of proposals. We would like to do 4-7 deals during this fiscal,” he said.

Asked about investment details, Subramanian declined to give specific numbers, but said “funding is not a constraint at least in our case.”

“The way we measure is -- how much of development value or sales potential are we creating through these acquisitions? What we would like to do by the end of this year is to have about Rs 2,000 crore worth of inventories we are acquiring in the form of land,” he said.

Asked whether the company is planning outright purchase of these land parcels, Subramanian said all kinds of negotiations are happening, right from purchase to joint development and management.

These inventories would be available for the company to launch and sell over the next three years, he said.

“Every year, if we are able to do that, then we will create a good pipeline of projects,” he said.

He further said the company is in discussions with potential investors to set up a fund for the development of mid-income premium housing projects, but did not provide further details.

Mahindra Lifespaces already has one such funding platform with HDFC Capital for affordable housing projects.

On new launches, Subramanian said the company is ready to launch four-to-five projects this fiscal, but said it will depend on the market situation.

He did not give any guidance of sales bookings for 2020-21.

The company’s sales bookings declined to Rs 818 crore last fiscal from Rs 1,023 crore in 2018-19.

For fiscal 2019-20, the company posted a net loss of Rs 193.41 crore as against a net profit of Rs 119.71 crore in the previous financial year.

Total income fell marginally to Rs 645.92 crore from Rs 653.87 crore in 2018-19.

Mahindra Lifespaces has so far completed projects totalling about 17 million sq ft, with another 6 million sq ft under construction.

It operates affordable housing projects under the Mahindra Happinest brand. Integrated cities and clusters are being developed in Chennai and Jaipur as Mahindra World City.

With many companies looking at shifting manufacturing base from China, Subramanian said there will be a good opportunity for industrial park developers as well as for the country.

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