By Raghavendra Kamath
L&T Realty , the real estate arm of L&T recently announced its plans to jointly develop three projects worth Rs 8,000 crore in prime locations of Mumbai Metropolitan Region. It plans to add around 5 million sq ft per year over the next five years. Shrikant Joshi, the company’s chief executive and managing director, discusses the company’s strategy and outlook for the sector in an interview with Raghavendra Kamath. Excerpts:
You recently announced three projects in Mumbai. When most players expanded rapidly in markets such as Mumbai in recent years, what is the reason behind moving cautiously in this market?
L&T Realty is a well-accepted brand and the customers expect us to develop large master planned communities replete with all amenities & facilities. We seek projects that meet our selection criteria viz. location, size, development potential and a reliable partner. We continue to receive and evaluate proposals, signed three projects worth $1 billion. We continue to remain bullish on similar expansion going forward.
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Your new projects in Mumbai are joint developments. Will JV/JD be your growth strategy going forward.
Industry has witnessed unprecedented consolidation with scales tilting in favour of large corporates that come with the assurance of financial stability, execution capability and cutting-edge sales & marketing forte. L&T Realty is one such organisation. Today, most landowners need credible partner who has the wherewithal to deliver on customers’ expectations and L&T Realty is a preferred partner. We are open to include JV/JD projects in our portfolio in case they meet our selection criteria. We are also open to acquiring land as well.
What is your sales target for FY23 and what kind of growth you expect over FY22?
Residential sector is on the bright spot with pandemic reinforcing the need for a tangible asset that offers stability in times of crisis. We have chartered our growth plan and expect our gross sales to grow at a CAGR of 40% in next few years and aim to cross Rs 10,000 crore annual sales by 2025. We have also created a strong delivery engine with highest standards of quality and safety across our projects to target a revenue growth at 35% CAGR.
What is your growth plans for FY23 and FY24?
Our foundation is deeply rooted in insight-driven planning, delivering quality product on-time and pursuing a sustainable growth strategy with technology at the forefront. We will focus on widening our base in MMR and Bengaluru with select presence in Pune, Hyderabad and NCR. Our growth strategy is to be a premium player and charter a profitable growth path.
What is your outlook for residential sales in FY23? Do you expect any slackness in demand going forward?
Need of customers is fast evolving and changing with times. Today they are more discerning and informed than ever before. Industry is undergoing consolidation and customers have a clear preference for large organised and trusted developers like us. Branded developers delivering quality products have always been market leaders. In fact, our two new launches of 2022, Elixir Reserve at Powai and West Square at Navi Mumbai have seen a strong demand from the customers.
The company plans to add 5 million sq ft per year over the next five years. How do you plan to fund it?
Funding is not a constraint for L&T Realty.
Many corporates are talking about hybrid workspaces and start-ups are downsizing their staff. Has it had any impact on office leasing so far and do you expect any impact on office leasing in coming months?
While commercial asset class demand did get muted during pandemic, big investment firms are optimistic about offices bouncing back. IT/ITES sector has been hiring rapidly. All major office occupiers have announced their intent to return to offices either completely or in a hybrid manner. Last few quarters have seen a sharp recovery in net absorption throughout key cities. We expect this asset class to perform much better from this year.
Do you plan to go for an IPO or a REIT for your commercial properties.?
L&T Realty has no such plans.
How has L&T Realty implemented Rera (Real Estate Regulation and Development Act) in its projects?
L&T Realty takes pride in being one of the most Rera compliant organisation in the real estate sector. Our internal teams take the required efforts so that we are proactively aligned with all Rera compliances and all our project applications to Rera fulfil requisite criteria.
We were the first ones to comply with the latest Rera guidelines with respect to allotment letter and agreement for sales (AFS) together with relevant declarations. In fact, for our recent launch, West Square at Navi Mumbai, we ensured that the Rera submission is in line with the new guidelines.