Brigade enters affordable housing segment

Projects with a ticket size of up to Rs 60 lakh per unit account for 30% of the ongoing projects.

Bengaluru-based publicly-listed real estate developer, Brigade Enterprises plans to foray into the affordable housing segment with a slew of new projects.

The company is planning to develop 4-5 million square feet (msf) of the area under the affordable housing segment over the next five years. The move is beneficial to both the buyers and the company as it offers income tax exemptions to both.

Currently, projects with a ticket size of up to Rs 60 lakh per unit account for 30% of the ongoing projects. These relatively small ticket-size projects are estimated to be 50% of upcoming projects (in terms of area). Brigade has 75% of its land located in Bengaluru market, according to a research note by Motilal Oswal.

Brigade holds a total land bank of 523 acres.

“We expect pre-sales of 7.8 msf over FY19-FY21 with booking value of Rs 4,100 crore on account of Brigade’s launch line-up. In FY18, pre-sales volume declined by 4% to 1.57 msf from 1.63 msf in FY17, as the company took a conservative call of not marketing its projects during the transition phase under RERA; we expect normalisation, going ahead”, Chintan Modi, Research Analyst, Motilal Oswal said.

About 35% of Brigade’s ongoing projects by area comprise sales from units of larger ticket size of over Rs 1 crore. Projects with ticket size ranging from Rs 60 lakh to Rs 1 crore account for 35% of the ongoing projects by area while projects with a ticket size of up to Rs 60 lakh account for 30% of the ongoing projects.

The company plans to launch another 4-5 msf of affordable housing projects over FY19 and FY20. This indicates that there is a clear shift in focus from high-value ticket size projects to relatively lower ticket size projects which is in line with the broader industry trend. Smaller ticket size (Up to Rs 60 lakh/unit) projects are estimated to be 50% of upcoming projects by area, Motilal Oswal said.

Brigade plans to build 800-900 sq feet (2BHK) of space. Expected ticket size for the projects would be Rs 45 lakh to Rs 50 lakh. The key benefit for the company would be tax exemption under the Income Tax Act, 1961. Profits from the said projects are not expected to attract Minimum Alternate Tax provisions under the Income Tax Act, as the profits from other projects would be available as an offset.

For the second quarter ended September 2018, the consolidated revenue stood at Rs 844 crore as against Rs 708 crore in the previous quarter.

 

Liked the story?

  • 1

    Happy
  • 0

    Amused
  • 0

    Sad
  • 0

    Frustrated
  • 0

    Angry

Comments:

Brigade enters affordable housing segment

0 comments

Write the first review for this !