With depressed market and so many peers anxiously dumping lots to raise cash, they sense a great and rare opportunity.
While realty biggies are in a rush to sell their land parcels to reduce debt, a few cash-rich and low-debt property developers and companies sense an opportunity to seal big-ticket deals.
The Ajay Piramal Group and its partner, Sunteck Realty, the Ashok Piramal Group's Peninsula Land and Oberoi Realty and the Wadhwa Group have become the most active buyers in the property market here, where big companies such as DLF and HDIL are selling realty assets.
Early this week, the Kamal Khetan-promoted Sunteck Realty bought a 15-acre industrial land parcel at Goregaon in Mumbai for Rs 400 crore. The Vikas Oberoi-led Oberoi Realty is in advanced talks with Om Metals to buy 850,000 sq ft of land in Bandra. It needs to pay Rs 75 crore and 50 per cent stake in the project to the seller. Oberoi Realty declined to comment on the deal.
In the upcoming property sales, the probable buyers are either develop-ers/corporates who have cash or those who can arrange it quickly, say property consultants.
Take the bidding for Hindustan Unilever Ltd’s (HUL) sea-facing property ‘Gulita’. The shortlisted candidates are billionaires Anil Ambani, Ajay Piramal and Gautam Adani, and realty developers Peninsula Land and Oberoi Realty. They have put in bids of Rs 400-450 crore each. While Ambani and Adani are looking at the property for self use, other players plan to develop it either as luxury residential apartments or a hotel.
Consultants say even on the land sale by DLF in the Worli area of Mumbai, where it expects to garner Rs 3,000 crore, only a few developers with cash on the books or a consortium backed by PE firms are expected to participate due to the high price.
“During the NTC or other auctions in the past, there used to be a rush of developers. In current land sales, the number of bidders is far lower and the profile is also different. Only financially sound developers are participating in the auctions now,” said Sanjay Dutt, chief executive of property consultant Jones Lang LaSalle (JLL), which is doing such asset sales.
Adds Niranjan Hiranandani, managing director of Hiranandani Constructions, “Obviously, people with cash are buying land parcels as banks are not lending to buy land. Usually, there are no buyers in a down market, but the presence of new players is a good sign for the market.”
In 2005, when NTC (National Textile Corporation) auctioned its 17-acre Mumbai Textile Mill land, a dozen city-based property developers were in the final round of bidding and finally, the plot went to DLF for Rs 702 crore. A few months ago, Jupiter Mills was taken by Indiabulls Property for Rs 276 crore amidst fierce bidding by other property developers.
Property consultants point out the active buyers now, such as Oberoi Realty and Peninsula Land, remained largely conservative during the property boom of 2005-08, when most companies such as DLF and HDIL bought land aggressively and piled huge debt on their books. The latest land-buying spree has been timed with the downturn in the property market. For example, Oberoi Realty, the only zero-debt company in the listed realty pack, which has Rs 1,190 crore cash on its books, is “well poised to deploy cash”, say analysts. Oberoi Realty bought back a 50 per cent stake from ICICI Venture in the GSK, Worli, project for around Rs 300 crore in the third quarter of this financial year.
"I am in this business to create value and we will do good acquisitions,” the 42-year old Vikas Oberoi had said in a recent interview with Business Standard.
With Rs 10,000 crore cash after the famous Abbott deal, the Ajay Piramal Group is “aggressively scouting for good opportunities in real estate”, says a property consultant who works with the group.
"Piramal's idea is to create one of the foremost real estate companies in the country and build great realty projects,” he says. An email sent to the group did not elicit any response.
In June last year, Piramal Realty, part of the group, bought a land parcel in Byculla from Mafatlal Industries for Rs 605 crore, making its entry into Mumbai real estate.
Ashok Piramal group's Peninsula Land spent nearly Rs 2,000 crore in the last two years to buy land in Mumbai, Bangalore and Hyderabad. Last October, the company bought Bishopgate, the property co-owned by Standard Chartered Bank and HSBC, for Rs 272 crore, outbidding four others such as Mahindra Lifespaces, Wadhwa group and others. Last month, Peninsula announced a JV with Brookfield Asset Management to float a real estate fund.
"We are buying land at reasonable prices. We feel this is the right time to buy properties,” said Rajesh Jaggi, managing director of Peninsula Land.
Agrees Dutt of JLL. “Land valuations have started to make sense. Barring a few, most deals are manageable,” he says.
Pranay Vakil, chairman of global property consultant Knight Frank, believes the clarity on development is also drawing serious players.
“In the NTC auction, developers thought they could buck the rules and develop more but that did not happen. With the new development control rules, buyers know how much they can exploit and price their bids accordingly,” says Vakil.
