Industry profile: The real estate sector is among the most globally recognized sectors. In India, real estate is the second largest employer after agriculture and is slated to grow 30 percent over the next decade. The real estate sector comprises four sub-sectors – housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the development of the corporate environment and the demand for office space and urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect, and induced effects in all sectors of the economy.
Indian Real estate Market is expected to reach US$ 180 billion. NCR & Mumbai are the biggest hospitality markets in India, followed by Bengaluru, Hyderabad & Chennai. Besides hotels, the hospitality market comprises serviced apartments & convention centers. Few large developers with a pan-India presence dominate the market, and the operating model has shifted from sales to a lease & maintenance. Rapid growth in services sectors: IT/ITeS, BFSI & Telecom, Rising demand from MNCs, Demand for office space in Tier 2 cities. Mumbai, NCR & Bengaluru account for 60 percent of total office space demand in India as of 2017. The office space absorption in 2016 across the top eight cities amounted to 34 million square feet (MSF), with Bengaluru recording the highest net absorption during the year, business activity shifting from CBDs to SBDs, Tier 1 to Tier 2 cities. India’s rank in the Global House Price Index has jumped 13* spots to reach the ninth position among 55 international markets, on the back of increasing prices in the mainstream residential sector.
Fundraising and investments in India’s office space sector, which have already reached more than US$ 2 billion in 2017, are poised to rise higher with further foreign investment of US$ 1.4 billion expected, as local developers and foreign investors expand their portfolios through fresh investments, acquisitions or launch of Real Estate Investment Trusts (REITs) to build and acquire office assets.
Company Profile: Godrej Properties Limited is a subsidiary of Godrej Industries Limited. The Company was incorporated in 1985 and is based in Mumbai, India. Together with its subsidiaries, the Company primarily engages in real estate construction, development, and other related activities in India and Singapore. It develops residential, commercial, and township projects across 12 cities.
The Company’s residential projects include Godrej Vihaa, Mumbai; Godrej Prime, Mumbai; Godrej Avenues, Bengaluru; Godrej Sky, Mumbai; Godrej Azure, Chennai; Godrej Prana, Pune; Godrej Central, Mumbai; Godrej Icon, Gurgaon; Godrej Garden City, Ahmedabad; Godrej Gold County, Bengaluru; Godrej Palm Grove, Chennai; Godrej Frontier, Gurgaon; Godrej Summit, Gurgaon; Godrej Platinum, Kolkata; Godrej Alpine, Mangalore; Godrej Platinum, Mumbai; Godrej Serenity, Mumbai; Godrej Anandam, Nagpur, and Godrej Horizon, Pune. The Company’s commercial projects include The Trees, Mumbai; Godrej Eternia, Chandigarh; Godrej Waterside, Kolkata. And Godrej BKC, Mumbai.
Shareholding Pattern: BSE Filing
Financials and ratios: [table id=205 /]
Future Prospects: Biggest issue in real estate is now increasing inventory. RERA is one more issue for the Company and, in fact, for the whole sector. Demonetization and GST also affect this sector. The operating cycle in the real estate business is around 4-5 years, and keeping good cash flow in that business is difficult, but this Company is unique due to its strategy. They don’t invest in land, so there is no need to block significant capital.
