India’s largest developer is looking to venture beyond the comforts of its home turf again but is treading cautiously as it prepares to navigate new markets.
Gurugram-headquartered DLF Ltd is eyeing a pipeline of new launches worth ₹1 trillion over the next 5 years but has no intention of rushing into projects unless the margins are attractive, Aakash Ohri, joint managing director and chief business officer of DLF Homes, told Mint in an interview.
While the Delhi-National Capital Region will remain DLF’s focal hub, the company is preparing to launch a project in Mumbai in January-March with apartments priced at ₹6-8 crore, Ohri said. DLF is also preparing to launch a villa project Goa and a residential project in Panchkula in Haryana, with apartments priced at ₹3-5 crore.
“DLF is not in the rat race of just producing and launching products for the sake of launching,” Ohri said. “We are making sure that there are products with margins and products that further will keep the interest of our customers intact and alive.”
“NCR will always be our main focus. Our hub will continue to be there—and there is a phenomenal amount of growth in NCR,” he added. “We are focusing hard on retail sales. We don’t want bulk sales,” he added. “We will handpick our buyer irrespective of the demand. That’s the change in strategy.”
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The Delhi-based developer had also planned to enter the luxury residential development space in Chennai last year, as disclosed by Ohri during the company’s 2023-24 December quarter earnings calls with analysts. But in March this year, DLF sold a 4.67-acre land parcel in Chennai for ₹735 crore to Cholamandalam Investment and Finance Co. Ltd, according to a regulatory filing.
“Back in 2005-6, DLF went national. They purchased land in Chennai, Mumbai, etc., but very few projects were successful. They were in stress and had to sell off some core assets,” said Pankaj Kapoor, founder and managing director of real estate rating and research firm Laises Foras. “So, these kinds of strategies are in line with their own past learnings and is a prudent approach.”
Not without challenges
DLF’s booking momentum dwindled in the September quarter. Nevertheless, the company retained its pre-sales guidance for the full financial year with new launches reviving its bookings—including the super-luxury The Dahlias project in DLF Phase 5, Gurugram.
Other top developers, meanwhile, are rapidly expanding across the country.
Mumbai-headquartered Lodha group entered Bengaluru in 2022, while Bengaluru-based Puravankara Ltd re-entered Mumbai after three decades in 2021. Godrej Properties Ltd, headquartered in Mumbai, entered Hyderabad last year with two land acquisitions, Mint reported. Emaar India, after launching projects in North India, plans to enter the Mumbai real estate market, according to a Hindustan Times report.
Also, DLF may find it challenging to tailor its projects to a local market’s unique tastes, lifestyle preferences, and economic dynamics, said Shalin Raina, managing director, residential services, Cushman & Wakefield, a real estate services firm.
Unlike in Gurgaon, where DLF has established itself in prime locations, securing premium land in high-demand areas in other cities may pose a challenge, he added.
At a group level, DLF has a development potential of 220 million sq.ft. across its development and leasing businesses. DLF Ltd alone has 131 millionsq.ft of developmental potential (excluding new launches) across India, according to the company’s second-quarter presentation to analysts. Of this, about 125 million sq.ft. worth of developable area is in Delhi-NCR (including new launches).
Turning debt-free
DLF was crumbling under a nearly ₹27,000 crore debt burden as of the second quarter of 2017-18 (July-September, 2017), according to the company’s analyst presentation.
The firm got some respite when its promoters moved ₹16,561 crore out of its books to DLF Cyber City Developers Ltd in February 2018, Mint reported earlier. DLF’s consolidated net debt reduced to ₹5,513 crore in December 2017 after strategic stake sales and asset monetisation.
Last year, DLF’s debt dropped to ‘net zero’.
Also, DLF’s net cash position has improved vastly—to ₹2,831 crore in the latest second quarter from ₹142 crore in the same period a year earlier.
“DLF has land banks which are historic. We are first monetising those,” Ohri said. “Today we would say that the burden of debt is, let’s say, not there.”
A top-tier revival
A key factor in favour of DLF—given its focus on super-luxury, luxury and premium projects—is the revival in demand for such residences across India.
Premium housing priced at over ₹10 million ( ₹1 crore) emerged as the largest segment, Shishir Baijal, chairman and managing director of real estate consultancy Knight Frank, wrote in a recent report titled ‘Residential and Office Market—January-June 2024’.
This segment accounted for nearly 41% of sales during this period, he wrote.
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“Markets like Mumbai and Delhi-NCR are leading this trend, with Gurgaon standing out as a hotspot for luxury launches, strong sales, and significant capital appreciation,” added Raina of Cushman & Wakefield. “Bengaluru and Hyderabad, traditionally mid-segment markets, have also seen an uptick in high-end and luxury property demand recently, signaling a shift in these cities’ residential landscapes.”
Factors like evolving lifestyle aspirations, an increasing number of ultra-wealthy individuals in India, and ongoing interest in prime real estate as a reliable investment are likely to sustain this demand, Raina said.
While he expects growth in the premium and luxury segments to continue the next few years, Raina added that “sales of larger luxury homes (4BHK) may see moderation, as higher rates and prices have made these properties less attractive to investors, who make up a significant portion of the market”.
