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Godrej Properties to focus only on top 4 cities, exit other markets

Godrej Properties, currently in 12 cities, will not launch any new project outside Mumbai, Bengaluru, Delhi NCR and Pune. Godrej Properties Ltd will focus on the top four cities and exit others over a period of time, a senior executive at the Mumbai-based real estate developer said.

The Godrej group firm, currently in 12 cities, will not launch any new project outside Mumbai, Bengaluru, Delhi-National Capital Region (NCR) and Pune—the four regions it plans to concentrate for future growth.

“Over the last five-six years, we have only added in these top four markets. We are not investing further outside of these cities,” Godrej Properties managing director and chief executive officer Mohit Malhotra told Mint.

The company plans to complete its projects in cities like Chennai, Ahmedabad and Kolkata but will not invest any more in them. “In places like Kochi or Hyderabad, we haven’t started any projects. We just decided not to pursue it. Land is still with us,” he said, adding the company would look at monetising those land parcels in the future.

Godrej Properties is among few established builders which had pursued on a pan-India presence, like some of its other peers including Tata Housing Development Co. and Shapoorji Pallonji Real Estate. However, other large firms like DLF Ltd and Oberoi Realty Ltd have remained focused either in one city or just in a couple of regions.

“The top four markets contribute a very large share to the Indian real estate sector. According to various reports, these cities account 65-75% to the total size of the property market. There is a large opportunity set available in these cities,” Malhotra said.

He added that building large infrastructure in each of the tier II cities was not financially viable in the long term. “Real estate is a local business and you need to set up large infrastructure to run this business. Putting that kind of infrastructure in every geography is not viable unless we have a large scale in those places,” he said.

However, Godrej Properties has lined up more projects for each of the top four cities this year. It is also exploring opportunities in affordable space in these four cities. “We haven’t been able to crack the right model (for affordable housing). We are still figuring out at what price points we would be launching,” said Malhotra.

On 9 June, Godrej Properties said it has raised Rs1,000 crore by selling shares to investment firm Gamnat Pte Ltd managed by Singapore-based GIC. “We have a good pipeline and we would be deploying those capital there. The rationale for raising this money is that we have good opportunity in the market given our ability to sell and execute,” he said.

Source : livemint

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