‘Cash-rich real estate developers splurge on building land banks ACQUISITION-SPREE. Top 16 listed realty companies sitting on 719,000-crore cash chest in first half of FY24 | | | — Janaki Krishnan Mumbai Flush with cash from the stepped-up demand for homes, real estate developers are using the liquidity to buy more land for business devel- opment, and, in some cases, alty companies had operating cash flows close to 219,000 crorein the firsthalf of FY24, Of this Godrej Properties and Prestige Estates Projects accounted for slightly over 40 per cent — Godrej raised al- most the entire amount from. debt, while Prestige Estates’ Fae were distributed ween operating cash profit, debt and flows fromieven” tures and subsidiaries. Many of the companies have been able to improve their operat- ing cash flow as they have de- leveraged over the last two years, leaving them with more funds. STRATEGIC PRIORITIES Major developers have indic- ated that while debt reduction is on their list of priorities, they also do not want to lose outonthe current demand. ‘The data show the cash has beenused in business develop- ment, capex, working capital, and repaying debt in some cases. Macrotech Developers (Lodha) and Godrej Proper- ties, for instance, are both en- tering new geographies with a focus on more launches and projects. Phoenix Mills, Oberoi Realty and Prestige Es- tates have spent significant amounts on capex in HI, the data showed. Lodha, which generated the Most operating cash flow, is aiming to exceed its guidance on business development for the year, and CEO Abhishek Lodha said it was seeing oj portnities for good esis across multiple locations, Tt hasused more than 60 percent of its cash flow in loan repay. ments and interest payments, rs A significant portion has also been used in investments and business development. Godrej Proper has been buying land for added growth and market share, and Execut- ive Chairman Pirojsha Godrej said that, while the company may not be adding land and Projects at the same pace, it would focus on targeted busi- ness development for contin- ued growth beyond the next three years. Ithas usedits debt funds mainly for working cap- ital requirements and invest- ments. Prestige Estates has been spending considerably on ac- quiring land banks and on con- struction. The company’s cash operating profit was augmen- ted by debt and the manage- ment admitted that it needs to secure land banks to sustain future launches. It also said that its borrowings will. in- crease for investmentsin land. Gurugram-based — DLF already has a substantial land bank with it and has spent a good portion of its cash flows on dividend payout, and in in- vestments in financial securit- ies, and in joint ventures. The company ig also focused on in- creasing its sales and gaining market share.