Conglomerates see new growth engine in property boom

Construction is not a core business for most conglomerates, and they are typically not as aggressive in this sector as pure-play real estate companies, according to experts. However, these business houses are now rapidly developing their land holdings to cash in on the boom in prices. Many are also venturing into buying land or tying up redevelopment agreements to scale up their real estate businesses.

Among those rapidly scaling their real estate businesses are the Raymond Group, Larsen & Toubro (L&T), the Kirloskar Group, the Shapoorji Pallonji Group, the Wadia Group, and the Aditya Birla Group, experts tracking the sector said.

Take the Kirloskar Group, for instance. Known for manufacturing engineering equipment such as pumps and diesel engines, the group established a real estate company called Avante Spaces in 2020 to build its corporate headquarters in Pune.

Now, the group plans to scale the company by building commercial real estate and leasing it out as office spaces. Avante Spaces will focus on developing the Kirloskar Group’s vacant land, including about 70 acres held by Kirloskar Industries, the group’s holding company. The company’s second project—a 1.5 million square-foot commercial building—is under construction.

“The intention is to, over the next five years or so, develop this business and build it up to scale,” said Rahul Kirloskar, a promoter of the group that spans listed companies Kirloskar Oil Engines, Kirloskar Pneumatic, Kirloskar Ferrous and Kirloskar Industries.

Real estate ventures

Similarly, L&T, which set up its real estate business in 2011 to monetise its vacant land, now eyes this business as a growth engine for the future. While the company has primarily worked on its own land or through redevelopment agreements to date, it is now looking to expand its portfolio by acquiring new land.

“It was started more as an ability to monetise our own land. Then the idea came, why don’t we make it into a business?” S.N. Subrahmanyan, the chairman and managing director of L&T, told Mint in a recent interaction. “So if this business grows, that’s a business for the future.”

The Raymond Group, which spun off its real estate business into a separately listed company in July called Raymond Realty, is rapidly developing new projects to maintain its supply of real estate. The company was founded in 2019 by Raymond as a means to generate returns from its 100-acre land parcels in Thane, near Mumbai, which it estimates have a business potential of ₹25,000 crore.

However, as the business scales, the company has ventured beyond its own land into the redevelopment of old buildings in Mumbai, with its first such project launched in the Bandra vicinity of Mumbai in 2024. The company has lined up five additional redevelopment projects in the city, according to its latest investor presentation. The business has grown from ₹200 crore in FY20 to about ₹2,300 crore in revenues in FY25.

“We are probably the fastest growing real estate company in India today,” Gautam Singhania, the chairman of the Raymond Group, said during an investor call in May this year.

Beyond core strengths

The Wadia Group—behind Bombay Dyeing and Britannia—is also looking to revive its real estate business, Bombay Realty, to monetize its vacant land in Mumbai, Mint reported last week. The group has assembled a new team led by newly appointed chief executive officer Rohit Santhosh to steer the real estate business of listed textile company Bombay Dyeing and Manufacturing Co. Ltd.

“Real estate has emerged as one of the most promising growth sectors in India, and we believe the timing is ideal to strengthen our presence,” Santhosh said in an interview. “For the group, real estate represents both a high-potential growth engine and a strategic diversification opportunity.”

Bombay Realty is planning to launch a premium residential project named Three ICC at the Island City Center (ICC), a gated community, near Mumbai’s Dadar locality, this year.

The Three ICC project will have about 500 homes spread across three wings and will be built on 4.5 acres on a 17-acre plot. The first wing will feature large apartments with private sundecks, priced between ₹15 crore and ₹30 crore.

This restructuring is in line with another erstwhile textile major—Century Textiles and Industries Ltd. The Aditya Birla Group company was formally renamed Aditya Birla Real Estate Ltd last year to reflect its new focus on the construction business. Earlier this year, the company divested its paper business to ITC Ltd for about ₹3,500 crore to raise capital and focus on real estate.

To be sure, Birla Estate, a unit of Aditya Birla Real Estate, was already an active real estate player, and the rebranding of the parent company and its divestment from non-core businesses demonstrate the group’s sharpened focus on the sector.

Last year, the Shapoorji Pallonji Group restructured its real estate business by consolidating its various brands into one company, Shapoorji Pallonji Real Estate Pvt. Ltd. (SPRE). The company is now rapidly developing its approximately 2,000-acre land parcels across Mumbai, Pune, Bengaluru, Gurugram, Kolkata, Mysuru and Nagpur with a target of over $1 billion in revenue this fiscal year, Mint reported in April.

The SP group is looking to list this business in the coming year or two, with the capital raised expected to help it service its debt. The SP Group promoters are keen to make real estate one of the group’s biggest businesses, Venkatesh Gopalakrishnan, the managing director of SPRE, said in an earlier interview.

Lucrative returns

The per-square foot price of real estate in India’s top eight markets appreciated over the last five years at more than twice the rate it did in the preceding decade, as per data from Laises Foras, a real estate data and analytics firm. In the National Capital Region, the compounded annual growth rate of real estate prices between FY12 and FY21 was 3.6%. Over the last five years, it has grown at a rate of 18.7%.

“Post-covid, real estate prices have started going up. So people may be thinking it is a good time to enter the sector,” said Pankaj Kapoor, managing director, Laises Foras. “I am seeing that most of the corporate houses are aggressively expanding.”

The sector has also evolved with simpler regulations and more professionalization, making it easier for a new company to enter the business than in yesteryears, he said.

Barring a slight slowdown in the first half of 2025, India’s real estate market has witnessed strong demand in recent years, and the easing inflation continues to support overall market stability, according to a recent report from Knight Frank, a real estate consultancy firm.

The residential real estate market has steadily shifted to higher ticket sizes over the past few years. In the first half of 2018, more than half the houses sold were priced under ₹50 lakh. Seven years later, fewer than one in four houses sold for less than that price. Meanwhile, houses priced over ₹1 crore increased from 16% in the first half of 2018 to almost half of the total sales in the first half of this year, according to the Knight Frank report.

“The biggest reason is the huge opportunity in India’s residential real estate sector. That itself explains why so many conglomerates are entering the space,” said Rahul Jain, lead analyst for real estate at Elara Capital. “They are monetizing legacy land holdings, which is one factor, but more importantly, they see strong potential and growth prospects in the sector.”