‘Our focus will be Delhi-NCR market in FY25’
Bengaluru-based Prestige Group is on an expansion spree. After becoming a formidable force in the software capital of India, the realty major has established itself in Hyderabad and Mumbai. Prestige is now eying the northern region to become a true pan-India realty company. “In the financial year 2024-2025, our full focus will be on the Delhi-NCR market. We will have our presence in Noida, Gurugram and New Delhi,” Venkat K Narayana, CEO of Prestige Group, told in an interview with Arshad Khan of this newspaper. He also spoke about demand in the housing sector, entry into the Delhi-National Capital Region (NCR) market, sales projection and more. Edited excerpts-
Housing sales hit a new peak in calendar year 2024 and Prestige posted robust numbers. How is demand and growth looking from such a high base?
We are doing well but there is so much more to do with the kind of demand we are seeing, especially when there is a shift towards the middle and upper-middle segments. There are good tractions across all the cities and segments, be it middle, upper middle, premium or luxury. We see interest rate start tapering down a little more after the general elections. This will further push the sales.
In CY22, when housing sales in top 7 cities stood at 3.6 lakh units, everyone said the industry had peaked and demand would consolidate. However, sales grew 31% year-on-year to 4.76 lakh units in CY23. I feel two things are happening in the industry, one, it is growing, and secondly some developers growing. Sometimes demand can be where it is but the share of good developers can grow within that.
Bengaluru’s share in your sales mix was 59% in FY23, followed by Mumbai and Hyderabad. Do you see this mix changing following your aggressive expansion beyond Bengaluru?
The mix of each city in our sales component is driven by what kind of launches are taking place within the particular fiscal.
This fiscal, we will have the second-highest contribution coming from Hyderabad because we had a big launch there. Number 1 will of course remain Bengaluru. In FY25, we will have a large contribution coming from NCR.
Currently, we have no presence in residential space in NCR but we have a lot of projects in the pipeline. Our entry into the Mumbai market has been very recent, so we are not yet operating at the micro markets at an optimum level. There is so much room to grow here.
What makes you so bullish about the NCR market given the region has strong players such as DLF and Godrej Properties?
The NCR market is doing well. Of course, DLF has a strong presence as it is their home turf. Beyond that, I feel there is room for other players to be present and offer their products.
We have one project going on in Aerocity (New Delhi) which is a hotel-cum-office. In Noida, we have a project planned and in Gurugram we have identified land. So far, we have signed one, constructing one and more are in the diligence stage. We tend to close them soon. We hope that this market also works out well for us like the way Mumbai worked out.
So your quest is to have a pan-India presence?
It is very easy in terms of processes to go to the different cities, implement them and be a differentiator. With the kind of team we have built and the relationship we have, our growth has always been a collaborative approach. There are a lot of developers who are in stress. We co-partner with them so their lands become projects.
Beyond NCR and our home turf Bengaluru, I see big opportunities to grow in Hyderabad, Mumbai and Pune. Of the overall 4.76 lakh residential units sold in CY24, half of them have come from Mumbai-Pune region. In Pune, we have identified land and now we are in the due diligence stage.
Sales-wise, how you are looking to close FY24? Also, you had one of the highest debt levels among realty players. Is it a matter of concern? (Net Debt as of December 31, 2024: Rs 6,980 crore)
We achieved the highest-ever nine-month sales in FY24 at Rs 16,333 crore, a growth of 81% YoY. Our 9M collection was the highest ever at Rs 8,478 crore. If we maintain, we will close the FY24 with Rs 20,000 crore sales. Our debt should not be compared with realtors who operate in only residential segment. Our residential debt is nothing. Our debt is coming from offices and hotels. You can compare us with players who operate in this space. In fact, we can say our debt is one of the lowest given the work we are doing.
It seems real estate sector is in a consolidation phase. Do you expect Grade A developers’ share to cross 50% mark in the coming years?
The regulatory norms such as RERA and situations like demonetisation added to the consolidation process. It will take couple of years to fully ensure all the developers are trustworthy, efficient and well-governed. Grade A developers’ share has grown to 35% from 16-17% earlier in the top 7 cities. I am sure this share will move to 50-60% in the next 3-4 years.