Success Story of DLF

June 5, 2007	(1 votes, average: 1 out of 5)  Loading ...
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From a decent beginning of developing small real estate projects to an immensely successful organized real estate developer, DLF, is a known name in India real estate.  In eighties, the DLF Group showed strong bullishness to buy land in Gurgaon, adjoining Delhi, with the objective of constructing a township.  Even till date, the group is reaping healthy returns and is likely to continue doing so in near future as well. The company holds large land reserves acquired at decade old low rates, but on which it is able to make killing.

DLF is looking to raise Rs 8,750 – 9,625 crore from its IPO. Of this, the company has decided to utilize Rs 6,993 crore to purchase the land. The remaining amount deducting issue expenses will be used for repayment of some of its 9,933 crore of debt. DLF is looking out for grabbing a major part of the Indian real estate pie.

Till present, DLF has completed real estate projects worth 224 million sq ft. Of this, 25 million sq ft was developed in the year 2006-07. The company is working on the 44 million sq ft, which will come to the market in the next three years.  Also, it has a land bank of 10,255 acres in 31 cities, with a saleable area of 574 million sq ft.

DLF has broadened its horizons in all the three significant segment of real estate – commercial, residential, and retail. Also, it is exploring new prospects in special economic zone (SEZs), hotels and infrastructure projects. Latter two projects are in a joint venture with renowned companies.

DLF purchases land and develops it according to the market trends and prevailing demand. It sells out its residential property whereas commercial property and retail projects are either sold or rented out. The company has begun selling the commercial buildings owned by it. In 2006-07, DLF has sold a 3.3 million sq ft of commercial assets to DLF Assets, a group company, for Rs 1,324.7 crore.

Currently, there is a good demand for residential property as more and more people are showing large interests in buying houses.

However, ups and downs are a part of every business. So it is with the real estate market, which at times discourages potential investors by showing a downward trend. The factors like large availability of cheap land and soaring property prices, DLF’s operating margin have increased from 27.2 per cent in 2003-04 to 60.8 per cent in 2006-07; net margin has marked a sharp hike by 13.9 per cent.

DLF has a threat to loose on its profitability as it is using its old land reserves in Gurgaon. Even, in its new real estate projects, land will be priced closer to prevailing market rates, which will bring a drop in its margins. Still, the company is likely to come up with more buildings in near future.

Overall, DLF enjoys excellent rapport in the market and is believed to grow by same leaps and bounds over the next three to five years at least.  The company is about to complete its four residential projects and 10 million sq ft of commercial projects with a  total revenue potential of at least about Rs 8,000 crore – on a conservative basis. The projects will be sold off in the next three years.

Continuing to outshine competition in Indian real estate, DLF has plans come up with more productive real estate projects in the next few years.

News Published Under:   Real Estate Developers |

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