Realtors’ appetite for land on the rise

A sustained recovery in the residential real estate market, and buoyed demand for warehousing and data centre space have resulted in a rush among property developers to seek and conclude transactions for land parcels across the country.

Deal momentum has picked up, with many transactions including outright acquisitions and joint ventures being either closed or are expected to be completed soon in the key property markets of Mumbai, Bengaluru, Delhi-National Capital Region, Pune, Chennai and Hyderabad.

Realty developers have acquired around 2,181 acres of land, across 104 separate land deals, valued at more than ₹26,000 crore in the 17 months between January 2022 and May 2023, according to data from JLL India. These land banks have an estimated development potential of around 209 million sq ft.

Around 578 acres, or 27% of the total, were acquired in the first five months of 2023. The data indicate that branded developers have successfully concluded many land transactions in top metros as well as tier-2 and tier-3 cities. “The momentum in the land deals is an outcome of the anticipation to develop a robust project pipeline to capture the buoyant housing demand. The trend has been prevalent across metros and top cities as realty players are skewed towards geographical diversification of their portfolios,” said Hiranandani Group managing director Niranjan Hiranandani.

According to him, higher land deals are also an indication of augmented capex utilisation, invested to clock higher sales and revenue in upcoming quarters.

The Mumbai Metropolitan Region (MMR), Delhi-NCR, Chennai and Bengaluru led in terms of total land area transacted, accounting for a 72% share, or around 1,576 acres, with a development potential of around 150 million sq ft across 79 land deals.

The property markets of Pune, Kolkata and Hyderabad together accounted for 9% of the total deals, while the balance was contributed by cities like Surat, Ahmedabad, Jaipur, Lucknow, Nagpur, Panchkula and Kurukshetra. In Delhi-NCR, submarkets of Panipat and Gurgaon led with a combined share of 73% in the region’s land transactions in the 17-month period. In terms of the number of transactions, the MMR and Delhi-NCR led with 53 transactions.

“Over 100 land transactions with a development potential of 209 million sq ft in the last 17 months are a visible indication of the positive sentiment for the real estate sector. Interestingly, most of the land transactions were for proposed residential development, due to the surge in demand leading to optimism in developers to build a robust supply pipeline,” said Samantak Das, chief economist and head of research and REIS, India, at real estate consultancy firm JLL.