Future Roadmap For Godrej Group’s Realty Business

Torbit - May 11, 2024 - - 0 |
Pirojsha Godrej

The amicable succession split in the Godrej Group that puts new gen leaders Pirojsha Godrej and Nyrika Holkar at the helm of family businesses, bodes well for the group’s real estate business.  Vinod Behl

As part of the family business settlement in the Godrej Group, while Adi Godrej and his brother Nadir Godrej  will gain complete ownership over the five listed group entities including Godrej Properties , Jamshyd Godrej and his sister Smita Godrej will fully control the non-listed closely held Godrej & Boyce. Jamshyd and Smita have interests in real estate  through the unlisted Godrej & Boyce while Adi and Nadar control the listed Godrej Properties.

As per the Godrej family  settlement dividing the conglomerate’s businesses , the group factions- Godrej Industries Group (GIG) running Godrej Properties  and Godrej Enterprises Group (GEG)  will not be competing in the real estate business , using the same Godrej brand either during the 6-year of their non-compete agreement or even after that.

Till now Godrej & Boyce owned the group’s land assets while Godrej Properties  was engaged in the property development business . But now following the realignment of family business, Nyrika Holkar , Executive Director and future Managing Director candidate at Godrej & Boyce , is free to build a real estate business . However, Godrej Boyce in which Jamshyd and Smita have interests in real estate, is restricted from buying new land  for 6 years under a non-compete agreement. It however retains its right to list its real estate business  . As part of the agreement, they will hold exclusive construction rights  over 3400 acres of land holdings in Vikhroli, Mumbai. This land bank under Godrej & Boyce has the sale potential of Rs 3 trillion.

Looking at the family agreement, Godrej Properties under the chairmanship of Pirojsha Godrej  has a bright future ahead especially as it has established itself as a formidable brand with great growth registered over the last few years. Godrej Properties registered an 84 percent increase in sales bookings in FY 24 to Rs 22500 crore and is aiming to achieve 25000 crore of sales in FY 25.  New land parcels will fuel future growth as Godrej Properties continues with its investments in new land parcels. According to ICICI Securities, looking ahead at FY 25, with a projected addition of Rs 20000 crore in new projects, estimated land capital expenditure is slated to be Rs 5000 crore. According to Pirojsha Godrej,  Chairperson , Godrej Properties plans to launch residential projects worth Rs 30000 crore  this fiscal across major cities to achieve 20 percent growth in sales bookings , leveraging strong demand. though investors are however wary of the potential because of high land acquisition costs and cash flow pressures.

The success story of Godrej Properties may well be attributed to the company’s asset light model-banking largely on joint development with land owners rather than outright land purchase, for robust growth. Pirojsha   Godrej wants to carry on with this tried and tested model to achieve future growth especially when land prices are skyrocketing. And now that as per Godrej Group’s succession plan, Pirojsha Godrej will be the Executive Vice Chairman of GIG succeeding Nadir Godrej as Chairperson in 2026, the empowered Pirojsha will be a real asset for the future growth of Godrej Properties.

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