‘Everything Looks Positive About Real Estate Business’: Brigade Enterprises On Growth Plans & More

Summary

Pavitra Shankar, MD of Brigade Enterprises, shares insights on the company’s latest launch, Brigade Alus, in Chennai. She discusses Brigade's expansion in southern India, with a focus on residential projects, and the company's strategic growth across multiple sectors, including residential, office, retail, and hospitality. Pavitra emphasizes strong demand, especially from end-users, and talks about the company’s future plans, including the possibility of listing its hospitality division and other verticals. Despite challenges like approval delays, Brigade remains optimistic about future growth and the stability of the real estate market in the region.

Takeaways

• 😀 Pavitra Shankar, MD of Brigade Enterprises, shares insights on the company's expansion plans in Chennai and its larger strategy in the South Indian market.
• 😀 The Brigade Alus project in Chennai is Brigade's fourth residential project in the city, with a total GDV (Gross Development Value) of approximately 1,700 crores.
• 😀 Chennai is becoming an increasingly important market for Brigade Enterprises, contributing around 20-30% of upcoming launches and land bank over the next few quarters.
• 😀 Brigade is focused on expanding its land bank dramatically, especially on the residential side, which has seen positive growth in terms of demand and pricing.
• 😀 Pavitra notes that the real estate sector is experiencing strong demand, particularly from the end-user segment, especially in Bangalore, Chennai, and Hyderabad.
• 😀 Brigade’s business model focuses on mixed-use development, spanning residential, office, retail, and hospitality segments.
• 😀 Brigade Enterprises is considering listing its hospitality portfolio, with plans already underway to file a DRHP (Draft Red Herring Prospectus) for it.
• 😀 Pavitra highlights the uncertainty around approvals in Bangalore but mentions that the company is navigating through the delays in obtaining necessary permits.
• 😀 Despite some delays in approvals and project launches, Brigade Enterprises remains optimistic about hitting its target GDV of 10,000 to 11,000 crores for FY25.
• 😀 Demand remains strong, with a shift in pricing dynamics; the frenzy of price increases from 2022 to 2024 has subsided, and current launches are more reflective of present market conditions.
• 😀 While the company's residential projects are focused on the upper-mid and premium segments, demand for such projects remains robust, especially from end users.

Q & A

What is the significance of Brigade Alus in the overall strategy of Brigade Enterprises?

Brigade Alus is a major part of Brigade Enterprises' strategy to expand its footprint in Chennai. It's their fourth residential project in the city, with an expected gross development value of around 1,700 crores, and it is aimed at the upper middle segment. This project helps solidify Brigade's position as a leading brand in the Chennai real estate market.

How does Chennai fit into Brigade Enterprises' overall business strategy?

Chennai is becoming a crucial market for Brigade Enterprises, representing around 20-30% of their upcoming launches in the next four quarters. Additionally, nearly 30% of their land bank is located in Chennai, highlighting the city's growing importance in their residential, office, and hospitality portfolios.

What factors have led to Brigade Enterprises' dramatic expansion in the last couple of years?

Brigade Enterprises has seen a dramatic expansion due to favorable market conditions in the real estate sector. Increased demand, rising prices, and positive absorption rates in residential spaces have driven their growth. The company has been actively acquiring land to support this growth.

Could Brigade Enterprises potentially list its different verticals independently in the future?

While Brigade Enterprises is focused on mixed-use development across residential, office, retail, and hospitality, there is a possibility of separate listings in the future. The company has filed a draft red herring prospectus (DRHP) for its hospitality portfolio, indicating they are open to exploring value unlocking opportunities if the portfolios reach the right scale.

How does Brigade Enterprises view the approval delays for new projects in Karnataka, and are they being resolved?

Approval delays in Karnataka, particularly for new projects in Bangalore, have caused some setbacks for Brigade Enterprises. However, these delays are slowly being sorted out, with some plan sanctions and approvals starting to come through. While delays have affected the timing of some launches, Brigade remains positive about future prospects.

What is the projected gross development value (GDV) for Brigade Enterprises in FY 25?

For FY 25, Brigade Enterprises has set a GDV target of 10,000 to 11,000 crores. While they may fall slightly short of their original launch goals due to approval delays, they are optimistic about meeting their overall launch numbers by the end of the financial year.

How has Brigade Enterprises' pre-sales value been tracking in the current fiscal year?

Brigade Enterprises has achieved about 67.5 crores in pre-sales over the first nine months of the current fiscal year. While they may not meet their original targets due to delays, the company remains confident in the demand for their properties, though it has faced a shorter selling period this year.

What are the key trends in demand for residential real estate according to Pavitra Shankar?

Pavitra Shankar notes that demand for residential real estate remains strong, especially from end-users in markets like Bangalore, Chennai, and Hyderabad. There is still a steady demand for well-priced units, with customers being more cautious than in the past. The frenzy of price hikes seen from 2022 to 2024 has slowed down, but the underlying demand remains robust.

How has pricing been impacting the real estate market, according to Pavitra Shankar?

Pricing in the real estate market has stabilized, with Brigade Enterprises focusing on launching projects at realistic prices that reflect current market conditions. While prices have increased due to a shift towards more premium projects, this is a result of the types of projects being launched rather than speculative price hikes.

What is the focus of Brigade Enterprises in terms of project quality?

Brigade Enterprises is focusing on delivering high-quality projects, particularly in the upper segments and premium categories. This focus on quality has led to an increase in average pricing per square foot, reflecting the shift towards more premium offerings.