Bharti Real Estate CEO Sayal focuses on the north, eyes government sale of key properties

“As a group, we are focused on North India and will continue to invest in the region, especially Delhi NCR, in the near to medium term,” Sayal said.

The company is also closely monitoring the government’s plans to divest prominent properties in prime locations, which may include the sale of The Ashok Hotel in New Delhi.

The approach

The company has chosen to prioritise its home market when most real estate companies are taking a pan-India approach. Competitors like Prestige Group, Delhi Land & Finance (DLF Ltd) and Godrej Properties, among others, have been on an expansion spree in new regions.

According to media reports, Prestige Estates, the group’s real estate arm, has new projects spread across Hyderabad, Delhi-NCR, Goa, Bengaluru, Mumbai, Chennai and Kochi. Listed real estate developer Godrej Properties is also planning to develop tier-II cities in South India. The company has a strong presence in Bengaluru, Chennai and had entered Hyderabad earlier this year.

DLF is also foraying into new markets like Mumbai and Goa“We continue to invest in capital expenditure for our new builds in Gurugram, Chennai, Delhi and Goa,” said its chairman, Rajiv Singh, in its annual report for the 2023-24 financial year.

While many are expanding beyond their home markets, there are companies like Raymond, which also continue to focus on their home market of Mumbai.

Expansion plans

Bharti Real Estate’s current expansion plans in Delhi-NCR include construction of a 17 million sq ft global business district at Worldmark Aerocity on land leased from the Delhi airport. Once completed, it will involve a total outlay of nearly $2 billion, which will be funded through a combination of debt and equity, Sayal said.

The project will consist of several phases. Delivery of the second phase will begin in June next year and will continue until the first quarter of calendar year 2027. Work on the third phase will begin in the next fiscal year and deliveries will begin after 2027.

So far, 1.5 million square feet have been built in the first phase. The company plans to build another 7 million square feet in the second phase. Finally, the third phase will see about 10 million square feet built by 2030.

Staying in the north

Bharti Group’s plan to stay in the North comes at a time when most markets are recording multi-year record property sales, except Delhi-NCR, which showed a 4% decline in sales, according to Knight Frank’s 2024 half-year report. However, it is worth noting that the first half of 2023 saw the highest sales in 11 years.

The National Capital Region’s primary residential market experienced moderate growth in the first half of 2024, with nearly 29,000 units sold during the period, which is sequentially lower than the first half of 2023 and the second half of 2023, according to the Knight Frank report.

“The steady growth in average residential prices over the past two and a half years has begun to reflect in sales momentum,” the report states. “Locations that were once affordable for homebuyers have become expensive due to a lack of move-in ready inventory and infrastructure improvements.”

For Bharti Real Estate, however, staying in its hometown could prove to be a great strategy.

“Developing within your home region offers a distinct advantage due to a deeper understanding of land issues, government policies and other localized factors,” said Pradeep Mishra, managing director of Oram Developments.

“While expanding beyond familiar territory can be a great strategy for developers to unlock new growth, it is best approached after achieving significant milestones in their core market,” he said.

Developers can also explore Tier 1 and Tier 2 cities to expand, or start cautiously with one or two projects.

Mishra added that there are examples of developers who ran into trouble by venturing too far too soon.

Other major real estate companies are cashing in on the market boom elsewhere. Home sales in Hyderabad hit a new high in the first half of 2024, with nearly 18,600 units sold during that time. Home sales in Mumbai also rose to a 13-year high with about 47,000 units sold, up 16% from the same period last year.

This was driven by a trend towards premiumisation in the real estate market. The number of residential units launched in the first half of 2024 reached a record of almost 160,000, with a 170% increase in the premium category (properties with a value of ₹3-5 crore) and a 116% increase in luxury properties (costing more than ₹5 crore), according to JLL reports.

In terms of office space, Bengaluru remained the largest, with the highest sales volumes, while cities such as Mumbai and the National Capital Region also recorded their best half-year results.

Commercial space vs. residential space

Pan-India demand for office space is likely to cross 70 million sq ft by 2024, driven by strong economic fundamentals and a significant boost in investments in the country’s physical and digital infrastructure, Credai reports.

The country’s real estate sector is cashing in on rising demand for residential units and office spaces across the country. Growing confidence in the improving economic outlook has also prompted office occupiers to expand their operations in India, according to the Knight Frank report.

“We can confidently anticipate that the Indian office market will close 2024 with an all-time high,” the report said. “In the residential market, while headline demand figures convey a narrative of resilient growth, underlying components are undergoing significant changes.”

India’s commercial real estate sector is also experiencing a boom, largely driven by global capacity hubs (GCCs).

The commercial market is valued at $40.71 billion and is expected to grow to $106.05 billion by 2029, at a compound annual growth rate (CAGR) of 21.1%, according to a July 2024 report by Assocham.

“Large developers with a pan-India presence will continue to dominate, setting new industry standards and leading to a more structured and competitive environment,” the report said.