Delhi Land & Finance – Strategy

or Serendipity?

By Strategic Management Group - 1

 Delhi Land & Finance (DLF)
(Company Overview)
• Founded in 1946 by Mr. Chaudhary Raghavendra Singh.

• Is India’s largest real – estate developer.

• Into development of residential, commercial and retail

properties.

• Since its inception the firm developed commercial properties

with a lettable area of 46.9 million square feet and retail
projects with a saleable area of 2.26 million square feet.
 Inception
• DLF was incorporated before independence, on
September 18th, 1946.

• C R Singh’s foresightedness that partition would lead

to mass migration, and new immigrants would need
“Homes”.

• Delhi’s landmark residential colonies like “Greater

Kailash”, “South Extension” and “Haus Khas” marked
the beginning of the “DLF Era”.

• Developed 21 colonies in Delhi between 1947 – 1961,

by persuading farmers to sell their holdings on credit,
as limited financial resources.
 Inception Contd…
• Later, development in the capital city was taken over by Delhi Development
Authority (DDA).

• Forcing DLF, to diversify into batteries and cables venturing with Universal
Electric, U S A.

• Both ventures were unsuccessful and later were sold off.

• Kushal Pal Singh’s final move with the 30 acres of land in Gurgoan, (Haryana).

• Started acquiring parcels of land from farmers.

• “Buy Now, Pay Later” Strategy.

• Singh was able to make headway.

 Windfall(s)
• Encounter with Rajiv Gandhi.

• Gandhi’s big dreams of fast track India to the 21st Century.

• Turning point for DLF.

• Securing Licenses and Permissions to re – classify agricultural to non –

agricultural holdings for urban development.

• Later Bansi Lal, new Chief Minister (Delhi), forces K.P.Singh to sit for four
years by cancelling issued licenses until reinstatement.

• Gurgoan, “Land of Opportunity”.

• Gurgoan’s appeal & social cachet.

• 1st Project “Qutab Enclave”.

• DLF City, “Asia’s Largest”, 3,000 acres township in Gurgoan.

 Windfall(s) Contd…
• Transforming Gurgoan from a barren expanses of farmland into a
busy, self – contained suburb.

• Gurgoan India’s “Call Center Capital”.

• Multinationals located Head – Offices in Gurgoan.

• Land valuation results valued properties between Rs. 965 billion – Rs.
1,066 billion of approximately 228 million sq feet in 64 locations
across India.

• Indicating developer profit of 20%, resulting land value between Rs.

772 billion – Rs. 853 billion.

• Source (Cushman & Wakefield, Jones Lang LaSalle)

 Business Lines
• Residential Development

• Commercial Development

• Retail Development
 Residential Development
• Build & sold wide range of properties including houses, duplexes and
apartments.

• Focus on higher end of the market.

• Creation of new suburbs and development of luxury and super luxury

residential accommodation.

• Developed over 8,800 acres of colonies & townships.

• Developed &launched over 20 million sq feet of residential space &

Theme – Based Projects (The Magnolias in the DLF City).

• Leisure facilities associated with luxury and super luxury residential

accommodation a powerful marketing tool & additional source of
revenue.
 Commercial Development
• Built, leased, sold commercial office space.

• Focus on properties attractiveness to large Multinational

tenants.

• 1st commercial development “DLF Center” central Delhi in 1992.

• DLF Center, Provided Leased Accommodation To Multinational

Corporations & Served As Corporate Head – Quarters.

• Majority of other commercial properties at DLF City, Gurgoan.

• By 2006, DLF leased out 4.89 million sq feet of commercial real

estate .
 Retail Development
• Established in the 1940s.

• Focused on developing, managing & leasing or selling shopping

malls including cinema complexes.

• Originally established business in development of local markets

and community shopping centers.

• Since 2001, developing A/C mega malls and other retail spaces.

• By 2006, became one of India’s leading developers of retail

space in terms of development of malls, shopping centers and
markets.

• Six retail real – estate developments formats were stand – alone

store, shopping centers, prime downtown shopping districts,
neighborhood malls, destination malls & super luxury malls.
 Retail Development Contd…
• Malls having a blend of superior tenant profile with
high quality infrastructure .

• Aiming of attracting shoppers with international

brands, national and leading local retailers.

• Providing tenants with retail space in a variety of

preferred locations was DLF’s malls expansion strategy.

• MoU with “Trent, (Tata Group)”.

• DLF’s cinema complex “DT Cinema’s”.

• MoU with “Metro Cash & Carry”.

 Project Implementation Process
• DLF systematic process of project
implementation constitutes:

• Land Identification & Acquisition

• Project Execution

• Sales & Marketing

 DLF’s Strategy
• DLF’s 7 key elements of the strategy included:

• Increasing land reserves in strategic locations.

• Expand core business lines nationally.

• Diversifying into SEZ’s development.

• Undertake infrastructure development.

• Diversity into hotel development.

• Move to a sales revenue based business model.

• Enhance execution capabilities.

 Industry & Competitive Scenario
• The real – estate development industry in India is
highly competitive.

• Divided into organized and unorganized sector.

• 70% accountability towards unorganized sector

by way of housing units constructed.

• Major Players in the organized sector being

Hudco, DLF, Unitech Limited, Ansal Properties &
infrastructure Ltd, The Hiranandani Group,
The Raheja Group and Gesco.
 Industry & Competitive Scenario
Contd…
• Regional real – estate players characterizing the industry.

• The Hiranandani Group forayed into Hotels “Rodas”.

• The Raheja Group established hotels in association with

Marriot.

• The developer’s reputation/title played an important role

influencing the selling prices of the projects.

• Competition in the new business came from established

contribution firms, hotel companies and various business
groups.
 Industry & Competitive Scenario
Contd…
• Development of the real estate sector was driven by:

• Demand for more housing units in cities & towns because of

growing urbanization of Indian population & easy availability
of housing finance at cheaper rate and tax incentives.

• Demand for office premises by growing IT industry, especially

BPO, India was a preferred destination for setting up back
office operations.

• Demand for shopping malls by growing retail segment.

• Demand for multiplexes by evolving entertainment sector.

• Demand for hotels/resorts by growing tourism industry.

 The Road Ahead…
• DLF new business model, “Develop & Sell”.

• Retain ownership of retail developments.

• Even if it sold retail developments it would retain the

management of the malls.

• In line with the changed business model, DLF planned

their growth for each of the three segments i.e.,
(Planned Residential Real Estate Projects, Planned
Commercial Real Estate Projects, Planned Retail Real
Estate Projects).
 New Business…..
• Special Economic Zones (SEZ’s).

• Hotels.
 Highlights of Union Budget 2010-2011
• Government committed to ensuring continued growth of
special economic zones.

• FDI inflows steady during the year. Government has taken

series of steps to simplify FDI regime. Intends to make FDI policy user friendly by
compiling all guidelines into one document.

• One-time interim relief to housing and real-estate sector.

• Proposal to maintain thrust of upgrading infrastructure in rural and urban areas.

IIFCL authorized to refinance infrastructure projects.

• Rs1,73,552 crore provided for infrastructure development.

• For rural development, Rs66,100 crore have been allocated.

• 1% interest subvention loan for houses costing up to Rs20 lakh extended to

March 31, 2011; Rs700 crore provided.
THANK YOU