Brigade avoids speculative buyers: MD

Says IPO aims to unlock value at group level

GULVEEN AULAKH

New Delhi, 23 June

Bengaluru-based Brigade Enterprises has consciously refrained from offering 10:90 payment plans, subvention schemes or even large discounts on bulk bookings to prevent encouraging speculative buyers, so as to save itself from getting caught in the cyclical trend that typically realty market goes through every few years, its Managing Director (MD) Pavitra Shankar said.

"We still put out payment schedules and requirements for the customer to stay invested in the project in a very conservative manner. So, even if it is an NRI (buyer), I'm not going to offer a 10:90 scheme. We're very careful that we are not encouraging more speculative behaviour than would normally be observed," she said in an interaction with Business Standard.

A speculative buyer in real estate is typically an investor who looks to getting quick returns on an upcoming property by buying into projects using instalment payments offered by developers at the time of booking, and intends to sell it to another buyer at a premium as the value of the project appreciates over time.

Realty players like DLF are trying to minimise their exposure to overtrading speculators who take advantage of the payment schemes but are unable to bankroll the bookings, leading to inventory as well as funding issues for developers.

"I have lost business in some cases because we've refused to waive a transfer fee at the time of booking," Shankar said, noting that the share of such buyers in the company's project portfolio was a small percentage of the total value.

The real estate major is planning to launch 16 million square feet (msf) of projects across residential, office and hotels in its home city of Bengaluru, Chennai, Hyderabad and Mysore in 2025-26 (FY26).

Also, the company will continue to focus on greenfield opportunities within these segments even as it faces competition from new players that are entering the Bengaluru market.

Shankar explained that the high holding cost of brownfield projects or those acquired from insolvency tribunal process was the prohibiting factor. The execution strategy of immediate monetisation on greenfield projects, which the company has specialised in over the last several years, tilted the decisions towards greenfield, she added.

However, she noted rising land prices as another challenge in executing the greenfield strategy in the face of new players coming into the market offering better pricing deals.

PAVITRA SHANKAR, MD OF BRIGADE ENTERPRISES, CITED RISING LAND PRICES AND NEW ENTRANTS WITH BETTER DEALS AS KEY

HURDLES TO THE GREENFIELD STRATEGY