NEW DELHI: Brigade Enterprises plans to move forward with its scheduled residential launches in FY27 and intends to continue land acquisitions despite evaluating the effects of global uncertainty, the slowdown in the technology sector, and delays in approvals, according to Pavitra Shankar, managing director of Brigade Enterprises.
The company recorded real estate pre-sales of ₹7,424 crore in FY26, amounting to sales of 6.13 million sq ft. It aims to achieve approximately 9-10 million sq ft in residential sales for FY27 to sustain its long-term growth trajectory, with Shankar noting that customer sentiment and timely approvals are crucial factors. Edited excerpts follow:
How was FY26 for Brigade Enterprises? Did the company meet its internal targets?
In office, retail, and hospitality sectors, we were generally on track with budgets, leasing, collections, and cash flows. However, residential sales, where we anticipated a 15% year-on-year growth, faced delays in approvals for some large projects that affected our launch timings and available sales window.
Will the spillover impact FY27 guidance?
In a usual scenario, we would expect to compensate for the shortfall in FY27. However, given the geopolitical situation in West Asia, supply chain uncertainties, energy price fluctuations, and inflation concerns, we are engaging in scenario planning. Our goal is to maintain about 15% year-on-year growth with a supportive pipeline, but sales will hinge on customer sentiment and approvals.
Will Brigade reduce project launches in FY27 due to uncertainty?
No. We will proceed with all launches planned from our land bank and pipeline. Holding onto land without development ties up capital and lacks a visible return. We have made conservative land acquisitions, so even with slower sales or lower-than-expected pricing, the projects remain viable.
Could margins come under pressure?
Margins may come under strain if both costs rise and customer sentiment diminishes. However, FY27 margins will reflect projects launched and sold 3-4 years ago, where costs and prices are already determined. New projects launched in the current environment may not achieve similar margin levels.
Are you altering your residential product strategy?
In recent years, we focused more on high-end inventory due to demand. Now, we are shifting focus towards the mid-segment as buyers become more price-sensitive. Our projects aim for achievable price points rather than just larger apartment sizes, and we currently do not have any plans for super-premium units priced above ₹5 crore.
Will Brigade redesign previously launched premium projects?
No. Redesigning a launched project is not practical as it delays timelines and approvals. Any changes regarding unit or ticket size must happen at the design stage before the launch.
Will Brigade pause land acquisitions?
We will continue to acquire land. In uncertain times, fewer players may seek land, creating opportunities for financially strong companies. We will assess land options, but with more conservative underwriting.
What scale of residential development are you targeting?
We aim for annual launches of around 10-12 million sq ft, with a target of approximately 13 million sq ft in FY26. For FY27, the target may increase, as slower sales could necessitate a broader project base to meet sales goals.
Will Brigade enter new markets like NCR or Pune?
Not at this time. Our focus remains on Bengaluru, Chennai, and Hyderabad. We have a substantial market share in Bengaluru and room for growth in Chennai and Hyderabad. We believe we can grow deeper in these existing markets before exploring new ones.
Do you prefer outright land purchases or joint development agreements?
We employ a mix. Joint Development Agreements (JDAs) reduce capital requirements, while outright purchases give us full control without reliance on a partner. We may have more JDAs in terms of the number of deals, but outright acquisitions generally involve larger investment values.
Could JDAs increase in a volatile market?
JDAs are more manageable from a capital perspective and favorable for the balance sheet, though they typically yield lower margins. Outright purchases are considered only when we have the necessary funds and can manage without overleveraging our balance sheet.
What’s the plan for senior living?
We have announced three projects with Primus. One was launched last quarter, with two more expected to follow post-approval. Senior living isn’t a sudden shift for us, as our previous project, Parkside at Brigade Orchards, was well-received, and demand is increasing with demographic changes.
Will senior living be standalone or part of larger residential developments?
Both options are viable. In larger residential projects, we may allocate 150-200 units for senior living and partner with operators like Primus. There’s a trend towards multi-generational communities that include seniors within a larger residential ecosystem, providing dedicated services and amenities.
How does the partnership with Primus work?
Brigade handles the development and sale of units, while Primus manages senior living services through agreements with residents. The operator is responsible for service provision, maintenance, and senior-care facilities.
What’s the status of BuzzWorks, Brigade’s flexible workspace venture?
BuzzWorks currently offers around 3,000 desks, focusing on Bengaluru, Chennai, and Hyderabad. This venture complements our office leasing portfolio, as many clients, including GCCs, may start with flexible office arrangements before committing to long-term leases.
What are Brigade’s hospitality plans?
Brigade Hospitality operates nine hotels, with another nine in various stages of development or approval. These are primarily in established markets like Bengaluru, Chennai, Mysore, Kochi, and Hyderabad. We are also considering leisure destinations and will explore opportunities in religious tourism if they arise.
Is Brigade considering branded residences?
We have looked into this segment, which can be suitable for specific project sizes and locations, especially those near a hotel. While we are open to it, no current plans exist.
Is REIT listing in the cards for the commercial portfolio?
A REIT is a longer-term option. We need to scale up our portfolio and diversify geographically across Bengaluru, Chennai, and Hyderabad. Currently, our rental income portfolio is around ₹1,000-1,100 crore, and we may consider a REIT when it approaches double that figure.
Did the transition from BBMP to Greater Bengaluru Authority affect approvals?
Yes, this transition led to uncertainty due to changes in officers and processes, which impacted approvals for us and other developers in Bengaluru. Some issues remain unresolved at the city corporation level.
How are raw material and supply-chain issues affecting projects?
Some impact has been noted in materials related to LPG and certain imported products like tiles and UPVC. For existing contracts, we have specified that price hikes cannot be passed on to us. For new contracts, potential impacts are still under assessment, but delays have not hindered project timelines due to existing buffers in construction schedules.
