Joint Ventures and Land Buys Reshape Real Estate

Amidst a surging demand for residential properties in India’s post-pandemic economy, developers are capitalising on land acquisitions and joint development agreements (JDAs) to establish a robust pipeline of new projects. With a revived property market in the world’s fifth-largest economy, developers have adopted both outright land purchases and asset-light JDAs to broaden their presence and meet the needs of a booming market. The property sector’s two main strategies—outright land buys and JDAs—offer developers flexibility to manage financial commitments while driving expansion in high-demand locations.

According to data from Liases Foras, residential sales in 2023-24 rose to 572,191 units in India’s top eight real estate markets, up from 467,298 units in the previous fiscal year. This increased sales momentum has further encouraged developers to secure land for upcoming projects, reflected in the 126,095 units sold between April and June this fiscal year alone—a notable jump from the 81,845 units sold during the same quarter the prior year. Notable players like Godrej Properties and Prestige Group have accelerated acquisitions in high-potential areas, including Gurugram, Bengaluru, and the Mumbai Metropolitan Region, to cater to sustained housing demand.

The JDA model has become especially popular in metropolitan centres with limited land availability, such as Mumbai, where developers enter revenue-sharing agreements with landowners to minimise land-related risks while enhancing project returns. Recent JDAs highlight this trend, such as Mahindra Lifespace’s collaboration with GKW in suburban Mumbai and Shriram Properties’ strategic entry into Pune through a JDA with a local developer. Shobhit Agarwal, Managing Director and CEO of Anarock Capital, explains, “JDAs enable higher internal rate of returns and mitigate the risks associated with land ownership, especially in high-density cities.” In the first half of 2024 alone, 556 acres were brought under JDAs across India, according to JLL India, underscoring the model’s traction among developers.

While land prices surged by 20-30% over the past three years, stabilisation in pricing has attracted developers with varied strategies. For instance, Arvind SmartSpaces has primarily expanded through JDAs in Ahmedabad, Bengaluru, and the emerging market of Surat. Backed by internal accruals and a platform with HDFC Capital, Arvind also eyes outright purchases, with plans for land deals totalling approximately INR 5,000 crore in FY25. The balanced approach adopted by developers—leveraging both outright buys and JDAs—signifies an evolving market landscape prioritising sustainable, long-term growth and responsiveness to market demands.

In this landscape, sustainable urban growth and community-focused development are increasingly critical. With rising land prices and demand for centrally-located residences, affordability remains a concern, especially in cities with high density and limited available space. By focusing on joint development agreements, developers not only optimise resources but also reduce urban sprawl and promote efficient land use, ultimately supporting a more sustainable future for urban real estate. This aligns with the real estate sector’s broader commitment to sustainable, strategic development in India’s rapidly evolving urban centres.