Oberoi Realty is in the final stages of purchasing a 50-acre land bank at Gurgaon’s Golf Course Extension Road and is prepared to enter the real estate market of the National Capital Region.
The financial terms were pending as the expert estimate that the land is worth more than Rs 1,000 crore. Oberoi must assume the debt to a financial institution that currently owns the land in order to acquire possession of it.
On the plot, IREO developments is building a residential tower that includes some pending things. Many homeowners have contacted the developer to ask how they could help the project get back on track.
Oberoi Realty responded and says as a corporate policy, we wouldn’t speak upon market speculations. Although Oberoi Realty has a strong reputation as a developer in the Mumbai real estate market, the industry will be closely watching its foray into the NCR.
According to real estate industry experts, reviving a project of this size that had stagnated is often a solid endorsement for Oberoi Realty in a market like NCR, where a few more of these inorganic growth options are available.
The Other Builders That Have Land Banks In NCR
They said that some large builders have their sights set on the smaller market. Golf Course Ext. Road is developing into a new centre for commercial and residential developments, and major players have a mission planned for this micro market.
While Oberoi is in negotiations, and launched a mission in addition. When it comes to Gurgaon real estate there are several distinct Class-A builders, including M3M, Hines, and Mahindra, have already started projects in the area. The rate has also increased by 20–30% during the last few months of developments.
Compared to Rs 294.77 crore a year ago and Rs 842.94 crore in the previous quarter, Oberoi has recorded consolidated an income of Rs 934.81 crore for the April-June quarter of economic year 2023.
Real estate developers are finding it harder and harder to purchase land in the NCR because of the involvement of lenders, growing legal issues, and high fees imposed by some state governments in the micro markets. The lack of a new title, according to experts at international property consultancies is also making it difficult for big builders to buy land.
Many of the recent land purchases have been made either through financial institution auctions or by taking on the developer’s debt. The Max Group has also bought two pieces of land in Noida and is negotiating to buy another land bank in the heart of Gurgaon.
The Noida-based Gaurs Group purchased a plot of land in Jaypee Greens in Noida with the intention of building an opulent complex of group housing. Recent acquisition of 40 acres by Gurgaon-based Elan Group from the fully paid licenced land for Rs 580 crore in one of the biggest land deals in the country right now in Sector 106, Dwarka Expressway, Gurgaon.
Why Land Bank Is Required By Oberoi Realty
Oberoi Realty’s medium-term expansion appears to be constrained since it lacks a land bank and transparency over how it intends to use its Rs 1,100 crore in cash reserves.
Oberoi’s stock has outperformed the real estate market over the past three months because to its premier projects in Mumbai, excellent track record of execution, and a solid balance sheet. These variables are all taken into account in its present price, which prevents additional upside.
In Mumbai’s Andheri, Goregaon, Mulund, and Worli, Oberoi has projects totalling 19 million square feet will be completed over the next five years. In Mumbai, where its products are in high demand, it has a strong sense of brand identification. It might not be as profitable for Oberoi to expand into other areas.
The company has been battling for a few years to buy land in Mumbai. It had placed bids in the majority of previous large land sales in the city, but due to intense bidding by rivals, it was unable to close any deals. Therefore, it is unclear how the vast financial reserves would be used effectively.
Due to this, international brokerages including UBS and BoFA Merrill Lynch have downgraded Oberoi. As a results none of their ongoing projects have significant progress. The project with the highest net asset value is Goregaon Property. This why the Pre-sales revenue from the project was flat in the third quarter. The modest rescheduling of two additional projects in Worli and Mulund is due to pending approvals. Considering this, investors may be better to wait for the companies to acquire some land and launch a new project without any delay.
Oberoi Realty Seeking To Enter Into The New Realty Market
The Mumbai Realty market gem Oberoi Realty has decided to invest Rs. 200 crores in a residential project in NCR. They are planning to acquire such land banks in metro cities like Hyderabad, and Bangalore for the residential developments.
On the other hand, they are working with the same approach in their core market Mumbai and seeking new markets. The company is currently looking to partner with existing landowners in the NCR area, which includes Gurgaon, Noida, and Greater Noida. They want to look at other places like NCR, Bangalore, and Hyderabad to expand their reach.
But before beginning projects in multiple cities, we will first make minor investments, research the market, and determine whether we feel comfortable to invest big. They have been looking at different properties for the past six to eight months, and be in discussions with a number of people.
Although we will start with micro investments to make sure that our way of working pattern is acceptable in the new real estate markets. They are hopeful that things will give them economic growth along with keeping focus on Mumbai with ongoing projects.