Indian Real Estate Developers Embark On Land Buying Spree Across Indian States
- 20th Nov 2023
In the period from January 2022 to October 2023, Indian real estate developers acquired approximately 3,294 acres of land across India, with a significant 44.4% of these acquisitions taking place in Tier 2 and 3 cities.
This trend, particularly strong in northern and western India, saw cities like Panipat, Ludhiana, Nagpur, and Panchkula collectively accounting for about 75% of the 1,461 acres acquired in these regions.
1000 Acres plus of land bought in a short period across India
Many property development companies in india are increasingly targeting Tier 2 and 3 cities, encouraged by growing customer demand and purchasing power. These areas have seen numerous land deals by well-known developers. In the north, destinations like Panipat, Sonipat, Kurukshetra, Panchkula, Lucknow, Jaipur, and Ludhiana are becoming popular, while in the west, cities such as Nagpur, Khalapur, Surat, and Palghar are drawing attention from national players.
The potential for sales in these areas is being estimated based on the development potential and the average saleable price in the respective local markets. Notably, a vast majority of the acquired land, 91.6% or 1,339 acres, is earmarked for residential projects, mainly low-rise and plotted developments, which are preferred by locals. Around 1,015 acres are designated for plotted developments, with a valuation exceeding Rs 3,163 crore.
The entrance of established real estate developers into Tier 2 and 3 cities has boosted buyer confidence, thanks to these developers' strong track records, execution capabilities, and access to capital. Their projects have been well-received, as seen in the rapid sales of new developments, like DLF's first project in Panipat and Godrej Properties' project in Sonipat.
Emerging cities in South India, including Ambur, Mahabalipuram, Coimbatore, Trichy, and Mysuru, are also witnessing the launch of residential projects.
This success has encouraged developers to further invest in these regions to create a supply pipeline for the future. Prominent developers such as Godrej Properties, M3M, Eldeco Group, and Omaxe Group are either entering or expanding their presence in these markets.
Additionally, some developers are planning holiday homes, catering to the demand from metro city residents seeking second homes in vacation destinations like Shimla, Rishikesh, and Goa.
Samantak Das, Chief Economist and Head of Research and REIS, India at JLL, highlighted that strategic land acquisitions in Tier 2 and 3 cities are increasing. He pointed out that the trend of launching plotted developments and low-rise apartments is particularly notable in these areas.
Over the last 22 months, these land deals for proposed developments amounted to over INR 3,163 crore. Das anticipates further growth and expansion in the residential market, driven by new land acquisitions in strategic locations and the positive response from buyers.