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Mumbai-based real estate firm, The House of Abhinandan Lodha, that shot to fame after it launched the first luxury plotted development in Ayodhya soon after the Ram temple consecration ceremony, has so far invested close to โน3000 crore across nine cultural and tourism locations and is expected to put in โน4000 crore in six more cities, including Shimla, Amritsar, Vrindavan, Varanasi, Nagpur and Khopoli over the next few years, Abhinandan Lodha, chairman of the company, told HT.com
โExcluding Ayodhya, we would have invested close to โน1800 crore across all projects – three in Konkan, three in Goa, one in Alibaug and one in Neral. The companyโs total investment in Ayodhya, that includes the 75-acre township, is close to โน1200 crore and the topline should be close to โน2000 crore,โ he said.
While the company has acquired land in nine locations, it is yet to finalize parcels in six.
Also Read: Are gods smiling for real estate investors in Varanasi, Ayodhya, other temple towns?
The company intends to invest close to โน1250 crore on the six new locations by the end of this fiscal and the rest over the next few years ( โน2750 crore). HOABL has identified 48 locations so far in cultural and tourism destinations connected by new infrastructure.
Why did the company go in for the luxury plotted development format?
During COVID-19, online real estate transactions gained traction. Investors realized that there was value in land and not in the building that you construct on top of it. It was during this time that โwe took up that challenge and launched a 100-acre project in Dapoli, a town in Maharashtra. Our contention was that if we can show what the development will look like 18 months from now, we would see greater participation from buyers,โ he said.
The company had anticipated that it would be able to sell the project in a year but โwe sold the project within three weeks of the launch and that too during COVID. The consumer proposition was extremely strong. Then we moved quickly from one city to multiple cities in India.โ
The companyโs strategy to launch branded plots was timed with the new infrastructure coming up across the country, not to mention the economic growth in cultural and tourist destinations, explained Abhinandan Lodha.
โWe identified 48 locations between 2020 to 2021. We saw infrastructure coming together and economic activity beat the national average. We initially identified 12 land parcels around towns that were getting connected with new highways, where we were confident that massive economic growth would happen,โ he said.
“Infrastructure is the core of what we do. Our identification of land parcels is based on the coming together of the local and central infrastructure and economic growth. These include both cultural centres such as Ayodhya, Vrindavan and Amritsar and tourism centres such as Shimla, Goa, Dapoli, Neral and Khopoli,โ he said.
Acquiring land a challenge – requires time and patience
Abhinandan Lodha agrees that acquiring land is a big challenge. โLand banking is a local subject, you cannot keep a team in Mumbai and buy land in Shimla or Vrindavan.”
โIn the first 12 locations, we hired local teams and lawyers. Acquiring land was a tedious and time consuming process. Our first lesson was that one had to go local and have a lot of patience. , what is important is that one has to go local and have a lot of patience in acquiring large tracts of land.
How it all started? The company acquired only 12 acres in Ayodhya in the first 12 months
In the first 12 months, the company managed to get less than 12 acres of land in Ayodhya, he said
The land in Ayodhya was acquired from more than 1400 farmers, and โbuying almost half a biswa, one biswa to aggregate land is not easy at all and continues to be a technically difficult subject even today. It is possible to do but you have to build large local teams and work with local farmers. Eventually, since farmers are the owners of the land, they have to be comfortable with you. You may be at a location for three to six months but not get a single inch of land. Itโs only when they eventually find comfort in the exercise do they start believing in you,โ he said.
Future plans for Ayodhya
The company has so far launched 75 acres in Ayodhya. โIt is difficult for us to get more land there. I think 75 acres is potentially what we may end up at. We have a great hospitality partner there like the Leela as part of our development. The Ayodhya project has by far been our best asset so far. Thatโs where we have witnessed the movement of a town to a city. Prices too have moved from โน9900 per sq ft in January 2024 to โน12500 per sq ft at present,โ he said.
โWe should have invested close to โน1200 crore in the entire development by the time it is over in March 2028, including the hotel and our topline number should be close to โน1800 crore,โ he said.
The company is expected to come up with a fist 5-star vegetarian hotel in association with The Leela in Ayodhya.
Besides the hotel in Ayodhya, the company intends to launch four more properties in the hospitality segment. โWe will announce the remaining four hotel properties as we finalize our alliances. Hospitality will definitely be part of the core of what we do. Senior living is a great opportunity but not in the short term,โ he said.
Acquires land in 15 locations
The company has so far identified 48 locations across the country. It has till date launched projects in nine locations.
โOut of the 48 locations, we have already launched nine in Ayodhya, Goa (three), Alibaug, Dapoli, Neral, Anjarle among others. We have acquired land in 15 locations. Acquisition in the remaining six areas is not yet complete,โ he told HT.com, adding these include Shimla, Amritsar, Varanasi, Nagpur among others.
โLand in these areas has been identified but acquisition is not yet complete. We are confident that we may be able to launch them in the next six to nine months,โ he said.
Buyers include 35% end-users and 65% investors
Abhinandan Lodha said that as many as 35% of buyers who purchase branded plots are end-users and the remaining are investors.
โAs many as 35% are clearly those who would want to build on the land and in some way may be called end-users. They too may decide to sell after 10 years. Another 20-30% are investors who may want to sell 24 months after the project is delivered. Remaining investors may want to stay invested for five years and above, but they wonโt build now,โ he said.
The average age of these buyers is between 25 to 40 years. Majority of them are salaried people.
These investors also include non-resident Indians who may have bought now but may decide to build five years from now if they move back to the country. NRIโs contribute close to 27% of the companyโs total portfolio. This segment has bought primarily in developments coming up in Ayodhya, Alibaug and Goa.
In developments such as Nerul, buyers are primarily from Karjat. โOverall, buyers are from South India, Kolkata, and North India. Majority of buyers for the Goa projects are from North India, Gujarat and Hyderabad. Buying land online has no boundaries. We have never met our buyers in person. Land is a great wealth creator. I may be sitting out of Mumbai and buying land in Amaravati. The buyer across the country and even overseas is willing to pay a premium for a clean titled land,โ he said.
Amaravati is part of the companyโs identified list of locations where it intends launching a project but it does not have land parcels there yet.
Most buyers today are looking at land as a wealth pool for the family. As many as 98% do not take a loan. โLand is a wealth asset and investors are buying from an identifiable objective. Most buy land when their children are small and intend to use the sale proceeds to pay for their higher education or marriages in future. Some may be buying land to plan for their old age,โ he said, adding, investors usually invest in land for a period of 10 years wherein the expected return on value is anything between 20 to 30%, he said.
Entire process of buying land is online
The companyโs fundamental goal is to democratize land. โWe donโt do profiling of our buyers before they buy. The process of buying land is largely online. The process makes sure that people who have the confidence to buy land online are educated and have enough disposable income to purchase the asset. They are here for the long term and have a mind set with the focus on value creation.
The online process by default keeps punters at bay. โThere are far more cheaper options available for them to punt. This is a relatively expensive proposition. There is a definitive premium attached to this investment,โ he said, adding as part of the agreement, buyers are locked in till the time of possession. โInvestors end up paying close to half the amount in the first six months.โ
The company also has a platform that enables people to sell their properties. โThere is a set of ready buyers who want to buy into the project after it is delivered and a set of people who want to sell after taking possession.โ
โAt least 17% of buyers are those who may have bought into multiple projects with the company,โ he said.
Are celebrity purchases project endorsements?
Abhinandan Lodha is quick to point out that the repeat purchases by Amitabh Bachchan in Ayodhya and Alibaug are not endorsements. โWe are clear that we do not want endorsements. Amitabh Bachchanโs deal was picked up from the registrarโs office. No quasi endorsements are happening on this front.โ
Budget 2024 proposals
Budget 2024 has proposed a unique identification number for land or ‘Bhu-Aadhaar’ in rural areas and digitisation of all urban land records as part of several land-related reforms in the Budget.
โThis is a wonderful move. For a company that is dependent on land records in multiple states, digitisation is a must. Once this is done, it will make participation in land so much more transparent for everyone involved. It will cut down a lot of effort on the part of developers who are not locals coming from outside,โ he said.
Also Read: Budget 2024: Focus on digitisation of land records, Urban development gets a leg up
Budget 2024 has also proposed long-term gains on all financial and non-financial assets will attract a tax rate of 12.5% but the indexation benefit for property sales would be removed.
โThis is a positive move too as sellers would always have the option of selling a plot and buying into a new one. It should be noted here that land appreciation is generally higher than an apartment,โ he said.
Also Read: Budget 2024: Planning to sell a property bought after 2001? Here are 7 things that you should know
Plans for vertical real estate development
The company does not have any short-term plans to get into high-rise developments. โWe are hoping to get there three to four years from now. It is definitely part of our mid to long-term thought process. Mumbai will be the first stop but that will not stop us from revisiting the cities where we have or intend launching branded plotted developments,โ he added.