Indian developers’ land transaction values up by 46 per cent last year

Indian real estate (realty) developers have acquired an estimated 1,947 acres of land involving an investment of Rs322 billion in 2023 across the country and the average transacted value of the land per acre rose by 46 per cent over the previous year, according to a comprehensive land transaction survey by JLL, international property consultants.

As the real estate sector is on a steep growth curve, Indian developers are building a robust supply pipeline by investing in land acquisitions across the country.

In 2022, the land area acquired was 1,603 acres by various developers valued at Rs18,112 crore. There has been a 78 per cent increase in the value of land acquired by real estate developers. In all, last year witnessed 111 deals involving development potential of 176 million sqft.

While the value of the land has been estimated at Rs32,203 crore by real estate developers in 2023 as compared to 1,603 acres in 2022, (valued at Rs18,112 crore), up by 21 per cent y-o-y, 70 per cent of the land acquired has been proposed for residential developments.

According to JLL, joint development agreements are not included in the analysis. Only outright purchases of land by various Indian real estate developers have been considered for the study.

The development potential is estimated on the permissible FAR/FSI (floor area ratio/floor space index) allowed in the respective micro markets where the land has been transacted. Sales potential is estimated considering the loading component of the development potential area and the average saleable price in the respective micro markets where the land has been transacted.

The land transaction study reveals certain interesting aspects in real estate sector in the country. The number of deals increased by 1.73x in 2023.

The number of deals with transacted value of Rs100 crore per acre or above in 2022 is 10. Whereas the number of deals with transacted value of Rs100 crore per acre or above has gone up from 10 deals in 2022 to 13 deals in 2023. The average value of the land transacted touched Rs16.5 crore per acre in 2023, up from Rs11.3 crore in 2022. The number of land transactions increased from 64 in 2022 to 111 in 2023.

In a significant development, more than 1,000 acres of land has been acquired in Delhi-NCR, Ludhiana and Bengaluru alone. In 2023, Delhi-NCR led both in terms of the number of land deals and area acquired with ~415 acre across 36 separate land deals valued at Rs9,120 crore. In a related development, select established players have acquired multiple land parcels across Delhi-NCR. Out of 415-acre of land, 264 acre (64 per cent) land valued over Rs5,300 crore was acquired in Gurugram alone. This was followed by Noida with over 59 acres (14 per cent) land acquired valued at Rs1,775 crore. Delhi, Faridabad and Sonipat contributed the rest. Ludhiana had a share of 16 per cent in land acquired as a large transaction for residential development was concluded there.

The Mumbai Metropolitan Region (MMR) has recorded the highest transacted value of land at Rs11,222 crore which translates into average transacted value of Rs39 crore per acre which is 2.3x of the average pan India land value. The Delhi-NCR led in terms of the number of land deals with a total of 36 deals locked in 2023, followed by MMR with 24 deals.

I plan to invest in partnership firm promoted by my friend in Mumbai. Can an NRI invest in partnership firm planning real estate. Ashita Aju, Sharjah.

An NRI can invest in the capital of a firm on non-repatriation basis. However, the Indian firm should not be engaged in any agricultural/plantation or real estate business or print media sector.

But a firm can invest in real estate development activity like residential or commercial development.

The amount invested shall not be eligible for repatriation outside India. However, you can seek prior permission of Reserve Bank for investment in firm with repatriation option. The application will be decided in consultation with the government of India.

Can an Indian entity having office in Dubai acquire immovable property outside India? Are there restrictions in this regard? Pranam Sudhir, Dubai.

An authorised dealer bank may allow an Indian entity having an overseas office to acquire immovable property outside India for the business and residential purposes of its staff, provided total remittances do not exceed the following limits as laid down for initial and recurring expenses, respectively (a) 15 per cent of the average annual sales/income or turnover of the Indian entity during the last two financial years or up to 25 per cent of the net worth, whichever is higher (b) 10 per cent of the average annual sales/income or turnover during the last two financial years.

V Nagarajan