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Dolat Capital Report
We take note of escalating land prices across most tier-I cities. This is based on our analysis of key land transactions in 2022 and sample survey (involving conversation with landlords) of top micro markets across tier-I cities. The three key takeaways are-
steady uptick in land prices versus pre Covid is broad based with prices spiking more than 200% in some micro markets. Notably this is well documented in weighted average pricing (basis absorption) for markets like Gurgaon offering positive real returns over three-five years while Mumbai lagging and long due for reflecting the increase in land prices,
big consolidation underway - large organised players accounting for ~80% of the key land acquisitions in 2022 and
National capital region emerging as the top favourite for geographic expansion with both regional non NCR and new players marking their entry. NCR (including tri-city) accounts for 58% (share in acreage) of overall land deals in 2022.
We view the combination of rising land prices and higher interest rates perfect for accelerating industry consolidation as overall project economics is likely to take a hit for players that do not command pricing power.
Additionally, we expect the luxury and above segment witnessing the highest consolidation. Overall, this positions the ‘Big Boys' of the industry at advantage.
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