Sunteck Realty plans to significantly increase its gross development value (GDV) from INR 30,000 crore to INR 60,000 crore over the next three years. This ambitious goal is supported by a major project in Dubai with a GDV of INR 9,000 crore and extensive expansions in Mumbai, including new phases and towers. The company is leveraging a strong balance sheet and a cash surplus of INR 1,532 crore to fund these initiatives. The Dubai project, strategically located near Burj Khalifa, aims to capitalise on the city's lucrative market, while Mumbai expansions focus on meeting growing demand and enhancing the development portfolio.
Sunteck Realty aims to double its gross development value (GDV) from INR 30,000 crore to INR 60,000 crore within the next three years, driven by a boom in residential sales. GDV refers to the estimated revenue from completed developments. The company's first milestone in this plan is a Dubai project, with a GDV of INR 9,000 crore.
According to Kamal Khetan, the chairman and managing director, Sunteck is integrating its existing investments into this GDV target and is exploring opportunities in redevelopment projects. A recent acquisition in Bandstand, Bandra (West), Mumbai, aligns with this strategy. He added that with a strong balance sheet and solid cash flows, the company is well-positioned to invest in new projects that fit their financial strategy.
Sunteck plans to launch new phases and towers in its Mumbai projects during the second half of this financial year, according to Khetan. This includes new phases in Naigaon and ODC, Goregaon East, additional towers in Mira Road, and new towers in Vasai and Kalyan. The company's pipeline includes ongoing projects and new developments, such as a luxury project on Napeansea Road in Mumbai and another in downtown Dubai, with a total GDV of INR 37,480 crore. With steady sales from current developments and more projects in the pipeline, Sunteck expects to achieve a 30-35% growth in sales bookings over the next few years.
In the first half of 2024, homes priced over INR 1 crore made up 41% of all sales, with NCR and Mumbai contributing nearly half of these premium sales, according to a recent Knight Frank India report. Sunteck plans to fund its new projects mainly through its own funds. According to Kamal Khetan, chairman and managing director, the company has a strong balance sheet with a net debt-to-equity ratio of 0.01x, meaning it is net cash-positive. Its gross debt is less than 25% of its collections, supported by strong cash flows.
As of June 30, Sunteck had a cash surplus of INR 1,532 crore, which will be used to expand its annuity projects and double its development portfolio. The company currently leases two properties, Sunteck BKC51 and Sunteck Icon, with 29-year leases and an average return on invested capital of about 30%. They also plan to start a new commercial project at Sunteck City 5th Avenue in Goregaon (W), expected to generate INR 250 crore in annual rental income.
A portion of the surplus cash flows is expected to be allocated to this project, with a selective approach to commercial investments to align with their high return on invested capital philosophy. Additionally, the company plans to use these surplus funds to double its development portfolio to INR 60,000 crore within the next three years.
The Dubai project is currently in the design and approval stages and is located in the prestigious Burj Khalifa Community near Dubai Mall. The development covers 1 million square feet. Khetan highlighted that Dubai's top-notch infrastructure and favourable tax environment make it an ideal location for ultra-high-net-worth individuals. Sunteck is confident that their luxury offering will meet the growing demand and capitalize on Dubai's vibrant market.
In conclusion, Sunteck Realty aims to double its gross development value to INR 60,000 crore in 3 years, driven by residential sales growth, new project launches, and a strong financial position to fund expansion.
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