Big business houses get into real estate business

Mumbai: After Godrej Group, other long-established business houses like Raymond and the Birla Group have now entered real estate business by launching realty firms and housing projects to unlock value from their idle land holdings.

Godrej Group, which has one of the largest real estate holdings in Mumbai, is developing its idle land parcels through its listed real estate arm, Godrej Properties.

Raymond Group, India’s leading fashion and textile retailer, is foraying into the real estate development and the company has set up a new division called, ‘Raymond Realty.’

As a maiden venture, Raymond’s 14-acre land parcel in Thane area will be developed, considering its locational advantages in terms of social infrastructure and connectivity to other parts of the megapolis.

Speaking on the development, Gautam Hari Singhania, Chairman and Managing Director, Raymond, said, “Raymond has forayed into real estate development in order to monetise the land at Thane. Keeping in mind the fact that this land parcel is in the heart of Thane, it offers a massive positive upside potential for venturing into the real estate sector.”

The Birlas have also ventured into the real estate business with the brand Birla Estates and claim to have received good response from home-buyers for their housing project in the Kalyan area of the Mumbai region and in Pune and Bangalore, where they hold real estate.

Birla Estates is a wholly owned subsidiary of Century Textiles and Industries.

Birla Group has had a strong presence in Kalyan for more than six decades with its Century Rayon manufacturing facility at Shahad and the adjoining colony that houses the employees of Century Rayon.

Anuj Puri, Chairman, Anarock Property Consultants, said, “Of all the elements in the real estate business, land is the most basic and often the scarcest resource. What is required is the right timing and strategy to utilise such land holdings for optimal business as well as social impact. We have witnessed developers holding on to land banks in remote locations for decades, waiting for demand to ultimately get driven to these locations. Those who have land in more central locations certainly don’t have to wait, but the right deployment strategy is always critical.”

Tata Group, on the other hand, in 2014 sold Tata Steel’s 25-acre land parcel in Mumbai's Borivali suburb to Oberoi Realty in order to monetise the idle land holding. Tata Group, however, is building its real estate arm Tata Housing by developing several housing projects across the country.

Vivek Rathi, Senior Vice-President( Research), Knight Frank India, said, “The structural changes brought by landmark regulations like RERA, GST and a few others in the real estate sector have changed the way development business is conducted. All of these factors together, coupled with the fact that idle prime land parcels on their books, have created a strong premise for long established business houses to venture into the property development business and we expect the trend to strengthen, going forward.”

K. T. Jithendran, CEO, Birla Estates, said:  “Our focus is to create a strong real estate brand and we are looking at developing a valuable portfolio of over 200 acres across the Mumbai Metropolitan Region (MMR), Pune and Bangalore markets. We are also pursuing joint venture deals in these markets as well as the National Capital Region.”

“The initial focus of Birla Estates is the creation of a strong brand in real estate, largely through development of premium/higher mid income residential housing in identified land parcels owned by the Group as well as through joint venture with landowners,” Jithendran said.