Ladies and gentlemen, good day and welcome to the Puravankara Limited Q1 FY 2026 earnings conference call hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Harsh Pathak from Emkay Global Financial Services Limited. Thank you, and over to you, Mr. Pathak.
Yeah, thanks, Manav. Good evening, everyone. First of all, apologies for the delayed start of this con call. We shall now begin. So on the behalf of Emkay Global, I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Ashish Puravankara, Managing Director, Mr. Mallanna Sasalu, Chief Executive Officer, South, Mr. Rajat Rastogi, Chief Executive Officer, West and Commercial Assets, Mr. Deepak Rastogi, Group Chief Financial Officer, and Mr. Neeraj Gautam, Deputy Chief Financial Officer. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Good evening, everyone. I am Deepak Rastogi, and I thank you for joining Puravankara's earnings conference call to discuss the performance for the first quarter of this financial year. The result and investor presentation are available on the stock exchanges, and we hope you have had a chance to review them. I would also like to thank our host for today's earnings call, Emkay Global Financial Services. Now, let me start with some brief highlights about the sector performance, followed by our financial and operational performance for the quarter. As you know, India's economy continues to demonstrate strong resilience despite persistent global uncertainties, geopolitical tensions, supply chain disruptions, and evolving tariff policies in key markets, such as U.S. Amid these external challenges, India's macroeconomic fundamentals continue to remain robust.
The RBI has maintained its GDP growth forecast at 6.5% for this year, financial year 2026, reaffirming India's position as the fastest growing economies in the world. In the first half of 2025, India's residential real estate sector benefited from supportive macroeconomic policies, especially from RBI rate cut of 100 basis points, which brought down the repo rate to 5.5%. This measure was aimed at stimulating credit growth and investment at the backdrop of global uncertainty. As a result, the inflation also pulled significantly with consumer price inflation easing to obviously the lowest in the last six years. The residential market remained steady during the period under review, with sales volume for the quarter stood at approximately 82,000 units across the top eight major cities. Chennai and Hyderabad led in terms of growth, recording impressive year-on-year increases of 16% and 6% respectively.
Mumbai maintained consistent demand and remained the largest market by volumes during this quarter. India's residential real estate market witnessed 9% quarter-on-quarter growth in new unit launches as sales remained largely stable during the Q2 of calendar year 2025. The mid-end and high-end housing segments continued capturing the attention of home buyers, constituting about 58% of the total sales across the top seven cities during the quarter. The office sector continued its strong momentum during Q2 of this calendar year with steady absorption observed across key markets. Office leasing during the quarter reached 20.3 million square feet, while new office supply of approximately 17 million square feet became operational. Space was taken up by domestic corporates and GCC, played a pivotal role in boosting the office absorption. Moving on to the company's financial and operational highlights for this quarter.
We achieved a pre-sales value of INR 1,124 crores, reflecting a 6% year-on-year growth. The sales value of West region increased by 58% Y-o-Y, primarily due to the new launch of Purva Panorama in Thane, Mumbai. Sales volume for the quarter stood at 1.25 million square feet. The customer collections for the quarter stood at INR 857 crores. The average realization also improved by 9% Y-o-Y to INR 8,988 per square feet, underscoring sustained demand and strong pricing traction across our portfolio. In terms of geographical sales contribution, Q1 of this financial year, 50% was contributed by Bengaluru, followed by Mumbai and Pune at 24%, Chennai at 15%, and Kochi at 8% respectively. Increase of sales from Mumbai and Pune from 15%- 24% during this quarter, indicating growing presence in western region.
Our launch pipeline for the year remains robust, with approximately 12.32 million square feet of planned development, which includes 9.22 million square feet new project launches and 3.1 million square feet of new phase launches. Notably, non-Bangalore projects now account for more than 50% of ongoing and planned projects, reflecting our strategic geographic diversification. Mumbai and Pune together represents 21% of the planned pipeline, underscoring our strong focus and expanding presence in West India. On the commercial front, we are on track to complete 2 million square feet during Q1 of 2026. In 2026, we have signed LOI with IKEA for 80,000 sq ft of carpet area at INR 150 per square feet for Purva Zentech. The building will be ready by January 2026, with handover expected one to two months later post their custom modifications.
With regulatory changes such as e-Khata have impacted handovers and revenue recognition timelines, we remain on track for planned delivery of more than 4,500+ units during this financial year. Out of the planned handovers, 3,000+ units, 3,015 units, approximately 3.65 million square feet have been completed and the OC has been received already. These are currently awaiting e-Khata issuance for handover possession. During the quarter, we handed over 667 units covering 0.68 million square feet, generating revenue of INR 539 crores. On business development front, we have been selected as the preferred developer for the redevelopment of eight housing societies in Chembur, Mumbai, with an estimated GDV of INR 2,100 crores, with developable area of 1.2 million square feet.
This forms part of our broader redevelopment portfolio in the city with four key redevelopment projects collectively with a developable area of 3.63 million square feet, which is expected to generate a GDV of approximately INR 7,700 crores. Further reinforcing our strategic presence and growth momentum in the Mumbai market. Further strengthening our presence in key micro markets, we have entered into a JDA for 5.5 acres land parcel in East Bengaluru with an estimated GDV potential of over INR 1,000 crores. Earlier this quarter, Puravankara partnered with KVN Property Holdings LLP for a 24.59 acres land parcel with 3.48 million sellable area with an estimated GDV of INR 3,300 crores. The project is located in North Bengaluru near the airport and is expected to launch within six months. These strategic initiatives underscore our focused approach towards expanding in high opportunity locations and driving long-term value creation.
Coming to the financials of this quarter, our revenue was INR 539 crores. EBITDA margin for the quarter was 15%, while we basically reported a loss of INR 69 crores. The sales and marketing expenses and overheads incurred for the pre-sales have been entirely charged to P&L as per Ind AS 115. On our debt position, our net debt stand at around INR 2,825 crores, which is at a net debt equity ratio of 1.68, with a cash balance of INR 718 crores, indicating a strong liquidity profile ensuring stability and operational continuity. Gross debt during this quarter actually reduced by INR 138 crores, with major, obviously, debt coming down on the Resi side, but because of the changes or the increase in the commercial, the net increase, sorry, reduction was INR 138 crores. Cost of debt has reduced to 11.35%, driven by continued focus on improving funding efficiencies.
We remain committed to optimize financial resources by continuously working on reducing, obviously, the debt per sq ft for under construction projects. In the next couple of quarters, we will see increased velocity in acquisitions and growth trajectory. Sorry, increased acquisition and new launches in the line of growth plans of the company. We want to highlight our strong growth trajectory over the last three years and the sales growth continues to be at a CAGR of 28%, while the collections have increased at a CAGR of 37%, reflecting our commitment to execution excellence.
To conclude, we continue to be optimistic about the sector, considering the demand-supply gap and rapidly growing economy. We are strategically launching the projects in our focus markets with a strong pipeline of already launched projects and further planned launches as well as ongoing business development activities. Thank you for patiently listening. We will now open the floor for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to ask any question, if you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have our first question from the line of Harsh Pathak from Emkay Global. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. First of all, on the upcoming launches, especially in the West region. Since the NGT order has come, and I guess there has been some clearance in taking clearance from the state government. How do we see launches in the West region? And I see in the presentation, most of them are lined up in Q3 and Q4. Where are we on the approval stage, and when can we expect progressively the launches to come in?
Rajat, do you want to take it?
Yes, I will answer it. Hi, good evening to everyone. As you rightly said that a couple of our launches were stuck because of the NGT reason. But now with the favorable order, we have started putting our applications for the MOA's approval. Understanding there is a long queue for all the cases that have been pending for the last one year. We hope that our Andheri project and our Thane project, they both will be available for launch in quarter four or maybe end of quarter three. From an approval perspective, I think our approvals and files are moving in the right direction. They are moving swiftly. And I think, in a matter of two to three months, we should start getting approvals. But I think the launches, as you said, will probably happen either in the end of quarter three or in the early quarter four.
Sure. I guess this will be phase-wise launches. What is the quantum we will be opening maybe phase-wise, if you can highlight some part of that?
Yeah. I think amongst the three launches that we intend to do in the West region, the total inventory that we open for sale will be in the range of around INR 3,000 crores.
Sure. In terms of hierarchy, which project can we see first coming? Maybe, will it be Bandra, Breach Candy, and maybe down the line we will go for Apna Ghar? We see there are a lot of launches lined up in those clusters. How do we see the launches there in terms of?
In terms of timeline, of course, not 100% accurate, but in terms of timeline that we predict, I think it is going to be Thane, followed by Andheri, and then Pali Hill, and Miami. Yeah. That is how we are planning.
Sure, sir. The Chembur projects which we banked very recently. When do we plan to launch these projects?
Typically, I mean, the approval process takes time. We just started working on the design and the prospects of it. From a launch perspective, we are expecting it only in the next financial year, maybe in quarter two of next financial year.
Sure, sir. I will come back to you. Thank you.
Thank you.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one now. We have our next question from the line of Deepak Purswani, from Svan Investments. Please go ahead.
Good evening to the team. Thank you for the opportunity.
Sorry to interrupt you, Mr. Deepak.
Yes.
Your voice is quite breaking. Can you please use your handset?
Just a second. Yes. Am I audible now?
Yeah. Please go ahead with the question.
Yeah. Sir, firstly, just wanted to get the sense in terms of the launch pipeline in Bangalore. If you can give a broader sense about the approval process there, how should we see the approval? I do understand in the presentation there is a timeline is given for each of the projects. But in terms of at what stage of approval we are, if you can give the broader sense for the project, like Grand Hills, Bellandur, Hebbagodi, Kanakapura, and Westend.
Yeah. This is Mallanna here. I think in the document that we have provided, we have already said that Bellandur is going to come in Q3. And the other one in Kochi, there is a project called Winworth phase two. We said it is going to come in for Q4. Grand Hills in Q4 and Hebbagodi in Q3, West End in Q3. Hennur Road, probably Q4 or Q3. Mallasandra, that is one of our project in Kanakapura Road, that should be coming up in Q3. Another Kanakapura Road project, which is called Vajrahalli, should be coming in Q4. Also a small product development, this is supposed to come in Q3.
The issue here has been that the Bangalore Development Authority and BBMP were revising the bylaws for the setbacks. What it did do for us is we went on revising it, and there were couple of revisions that was brought in by the authority themselves. While we did our thing and when we went for the approvals and the approval got delayed, further revision and further revision. I do not see any challenges in bringing these things within this year. Within the timelines we have set, maybe one or two projects may go one or two quarters this way or that way, but we are committed to probably launch all these projects within this year.
Okay, cool.
As far as where are these approvals and all NOCs received on all properties that now we have got the NOCs, it is just a matter of authority approvals is what is pending now.
Okay. And sir, in terms of the demand environment in both of the regions. Firstly, on the Bangalore side, and secondly, on the western region side. What is the kind of absorption based on the current traction in the launches we are seeing? What should be the broader absorption trend we are observing? We are expecting in terms of the launch pipeline and in terms of getting the usage from these and for the upcoming projects?
Rajat, do you want to talk about it from Mumbai and Pune, and I'll talk about Bangalore and South India?
Sure. I'll just give a I think the market remains very favorable, especially on any product which is above INR 2 crore, and that's the segment primarily that we are catering in the west, especially in Mumbai. All the products that we have in the launch pipeline, be it Andheri, Bandra, or Breach Candy and the Thane phase two. They're actually in phenomenal locations. They're locations where customers are really looking for. We already have started getting a lot of inquiries, so we remain to be very positive, and the market also very supportive in the segments that we are currently catering to. Mallanna, do you want to-
Yeah. If you really look at what's happening across, I think in Deepak's-
Introduction
Deepak's introduction, opening remarks, he said about how the markets are doing. Nevertheless, if you look at all over India, 66,300 units were sold in Q2 of 2025. Units launched were 72,200, which means that it's a very balanced market at this point of time. That is, the number of units that are coming in versus number of units that are getting sold are almost in tandem. If you look at 58% of these things are coming from just Mumbai, Pune, Bangalore, and South India. Which is exactly where we are operating. Then particularly in Bangalore and in Chennai and in Cochin, what we are seeing is the demand is quite stable, and I would say that between stable and robust. Because any of the projects that have been launched, the offtake is very good.
The number of players has come down, and whoever is the larger players, listed people, players like us, we are really taking a premium out of that. So it's a great market, and maybe my thing is that we had a good run over the last two years on the pricing side as well. Maybe pricing might have achieved its target and maybe it's going to be there. The prices cannot go at the same rate as which went up in the last two, three years. Nevertheless, it will beat the inflationary numbers, is my opinion. So it's a great market to be in.
Okay. So, I think Thane project, actually we launched phase one at the fag end of the March and early April. If you can give a broader sense, what was the total launch pipeline inventory, launch inventory during that time, and how much has been sold, and how has been the response for that project?
For the Thane launch, we launched close to around inventory, around INR 300 odd crores. We've already sold around 20%-35% of all the inventory at the launch. The launch was very successful in the price that we received was above INR 20,000 as a realization at the launch, which probably is one of the highest in that micro market. Most of the people who bought with us were keen on the quality that Puravankara provides, and we continue. We're very hopeful that in the phase two and the new inventory that we get post these recent approvals, I think this launch can be a much more bigger launch and the numbers perspective.
Okay. If I understand correctly, earlier in the presentation, we were giving that the total GDV for this project would be around INR 3,500 crore. Eventually, what would be the timeline where we would be looking out to monetize this complete project? Also, is it going to be purely a residential development, or is there going to be the mixed-use development in this project?
Yeah. Just break up the question into two. One is overall, you are right, it is overall a INR 3,700 crore GDV project. We are looking at launching the entire project over a period of one and a half years. As I said earlier, it got a bit delayed because of the NGT issues, and now with that issue being over, we are quickly working on the approvals. Within a matter of one and a half years, we should be able to launch all the towers in the project. Number one. Number two, yes, it is a mixed-use. We have a sizable retail because it is right on the Ghodbunder Road, one of the most premium locations in Thane, and we are developing close to 3 lakh square feet of retail in this project.
Okay. What will be the timeline for the next project, and what will be the GDV we would be looking at? Second question to it, what will be the retail area which we would be launching, and when we would be looking out to launch that project as well?
So as I said, I think this is a composite project with five towers. We launched the first phase, which was around half of a tower, as per the current last approvals. Now we are going to be launching another two towers, and hence over a period of one and a half years, we will be launching all the five towers. In terms of the retail area we are not launching. We intend to hold the retail area. We are not looking at selling the retail area. As of now, we will try and build a product which can lead to annuity income in future. So right now, I think we are not opening any retail area.
Okay. On the commercial side of the development, Zentech, where we were looking to monetize that project. If you can give this broader update, at what stage we are in. Where has been the progress about the monetization of that deal?
As Deepak mentioned in his presentation just now, that we will be able to lease the entire retail area to IKEA. That is one of the most significant deals that happened in the last quarter at a rental of close to INR 150. Apart from that, as you rightly said, we are monetizing the asset. We have already sold close to 15% of the asset so far. And right now as we speak, I think there is a business which is going on. So we hope by the end of this financial year, we will be able to monetize substantial part of the asset.
Okay. Just final question from my part. If I were to look on the cash flow slide on slide number 23. Couple of things. One, on the collection side, year-on-year, that means like I do understand because this time there was only the sustaining sales and there has been no launches. If you can also give the broader perspective once the launch pipeline open, how should we see this collection number going ahead? The second part of the question is, there is also the line item exit or investment equity in nature to the extent of INR 322 crore. If you can give the broader reason of what this amount pertains to what?
Yeah. Your question has two parts. A is you said that collections or operating surplus is a little less compared to the previous quarter. What are the reason, and how it will be going forward looks like? Current quarter, as we have mentioned that there's less launches and that impacted our collection a bit. However, the question of your second question, the answer lies in slide number 24. If you look at slide number 24, we have a balance collection to receive from the sold units itself, INR 4,643 crores. That means we have sold the inventory, and as we construct faster, the collection will come. Going forward, we see there is increase in collection. As we build faster, the collection will come in. The third point which we ask about the cash flow, which is INR 322 crore, which is investment in equity in nature.
We are referring about the drawdown, which we have done from HDFC Capital which is INR 282 crore, which is payable and enable a structure and zero coupon bond. We utilize this money in acquiring one of our, which we announced, the Hardware Park property. Another INR 50 crore we have drawn from the 360 One. That facility is also payable enabling in nature, and that is the basis of surplus sharing and IRR based, again, a zero coupon bond. That money we have applied for our Deccan redevelopment project in Mumbai. That is why it has been classified as a separate line item.
Okay. Just one-
One addition to the first point in terms of the cash flow reduction. Obviously, it is, I think the contribution that would have come from new launches. Also, if you notice the handover, while the projects are complete, the balance 10% that we get on possession, those have gotten delayed on account of that e-Khata.
The projects are ready, as and when that e-Khata comes, and we start doing the registration, because most of these apartments are funded by banks. They pay that balance 10% only on registration. Which have gotten delayed because of some change in government rules in this whole e-Khata business. If we had handed over, for example, what we had targeted for this quarter, while on the business side, the project is complete, but from a handover point of view, because of the e-Khata, that possession has gotten delayed. That's the second reason why you see that smaller number.
Okay.
That also answers the question why comparatively the revenue is lower, and that's one of the reason why the revenue is lower as well. While the expenses remaining constant on the future projects of marketing and general admin expenditures going up, and the revenue not recognized despite the project is completed because of this e-Khata business. That's the reason why you see that the revenue numbers being low.
Would it be fair to say now this e-Khata issue would be behind us and incrementally, one, on the sustaining part of this collection should improve. Second, with the launch of new project, there would be substantial increase in the collection going ahead. Secondly, this balance collection from sold units of INR 4,643 crore, what would be the timeframe where we would be looking out for this collection of sold units?
That is for coming from our current ongoing projects, which is two to three years, we will be able to achieve this collection.
First question.
Yeah. From a first question perspective, Deepak, we are expecting next, mostly from Q3, Q4, you will have very strong collections. Q2 also will have something more, but Q3, Q4 will be the higher collections is what we expect because what Mallanna just suggested on the e-Khata thing, with the glitches there, if everything goes right, obviously everything will fall in place in the current quarter. Else, it will actually get into the next quarter. Let me assure that we have enhanced the team here, that we are very confident that whatever we think, we should be able to do it, we will be able to achieve it during this year.
Okay. Thank you. Thank you, and wish you all the best.
Thank you.
Thank you.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one on your touch tone phone. Anyone willing to ask any questions, you may press star and one now. Anyone who wishes to ask a question, you may press star and one now. We have our next question from the line of Chintan Mehta from Puniska Family Office. Please go ahead.
Hi, sir. Thanks for the opportunity. I just want clarification. In press release we mentioned about the surplus cash flow. This surplus cash flow also include the redevelopment project, all of the redevelopment project?
This surplus includes all our ongoing project, plus also our projects, phases of the existing project which we are yet to open for sale. Also the launch guidance which we have given, which is there in our launch guidance in this Investor/Corporate Presentation, slide number 16. It does not include any business development, new business development or which we are signing. It is precisely from our inventory open for sale, plus inventory not open for sale, plus the launch guidance which we have given, which is on slide number 16. Nothing more than that.
Redevelopment is actually included in this, is what I can confirm basically. Which is your Apna Ghar, which Rajat was mentioning, we just got the NGT clearance. Miami and for Deccan. Those are the three redevelopments, which is part of the current cash surplus. Which would obviously, once we launch it, over a period of time, we would be able to at least get those surplus in place.
But certain ones, like for example, what we just recently announced, Chembur, the 4 acres, that's not part of this. Those cash flows have not been included, so those are all additional.
Correct.
Chembur, and also we announced that-
KIADB
The one which is the KIADB land, that is INR 3,300 crore GDV, that is not included. We announced another one, [inaudible] Balagere in Bangalore. That was another INR 1,000 crore. That is not included. They are all there in the public domain. While we are actively pursuing quite a number of opportunities which are coming to closure, these are the things which are not included.
Okay.
There are about four or five projects where the transaction is closed but have not been included in this cash flow.
Okay. And sir, what is the margin difference between these two, own land development projects and redevelopment projects?
Among the 10 in the South India that we have, nine of them are own lands and one is a joint development agreement. I think rest, the three that are listed here, are all redevelopment.
I just wanted the margin differentiating between-
Even in redevelopment projects, Chintan, the margins are different for every project. Just to give you a perspective, I think the EBIT levels that we would like to operate would be between 20%-25% across our project portfolio. I am talking the redevelopment projects.
Okay. For own land project, it will be higher than 35% or 30%?
Approximately about 30%.
Again, it depends, obviously, what kind of. We look for our internal purposes. We look for, obviously, a particular IRR benchmarks, and we also look for gross margins. Generally, we would look for more than 24%, especially for the own land acquisition and all, as far as the gross margins are concerned. I can tell you, most of the projects will be in and around or even higher than what you are referring to.
Also, it will not be a perfect science because it depends on-
No, I am talking about IRR only.
When we acquire the piece of land-
Okay. He is talking IRR. So IRR, purely from an IRR perspective, redevelopment would have higher IRR because there is no land cost which gets associated with it. It is more of a construction and some kind of, obviously, the approval cost which comes in. As far as the outright sales is concerned from a land perspective, obviously, IRR would be slightly less comparatively. But anything which we look at it should be upward of at least 18% IRR. That is the way we look at it. And it can go up to 30%, 35% and even higher than that. So it depends upon what projects we are talking about and which are the locations, and it will be very difficult for us to give you a very generic answer to that because it has to be project by project.
Okay. Okay, sir. And sir, one commercial project which we are looking to monetize, what is updated there?
I think on the commercial project, as I said that the work is already in progress. We have already monetized around 15%-20% of the asset as we speak. And we are very hopeful by the end of this financial year, we will be able to monetize a substantial part of the asset.
Okay, sure. Sir, just the last question from my side. How do we see this digital khata, e-Khata registration? Because of that, the price can go up. How do you see that in Bangalore specific market?
The question here was that e-Khata was a piece of paper. Now they made it is just the same khata, but it is in an electronic form. And basically what happens is that once you complete the project and the khata means the ownership comes into the developer's name first, and then it gets transferred to the ultimate customer. Customer again goes back and makes their own e-Khata.
The entire thing that because of the process, and it is all machine-driven and the software are new, and some of the things cannot be uploaded, and some of the options are missing, and probably was, kind of, I would say that not well thought through. And because of which, what has happened is that when we get the khata, then only we can go and register it. So that is the challenge. There is no cost increase and cetera, because if the project is completed, maybe it is a delay of one or two months, that we need to take it in our stride and move forward.
Okay. Just for curiosity, this e-Khata also require compulsion to register lands and all the records. Are we following, we have intent to following or how you see that, as a positive, negative?
In the long run, it is positive. It is always anything technology coming in and everything becoming paperless is fantastic. But thing is in the short run, till it is implemented properly, just exactly like the way it happened in GST, right? Once it is implemented, once it is going fine, then it is fantastic. It is a very good thing for the industry and for the entire state of Karnataka in terms of land records and other things.
Sure, sir. Understood. Thanks for the opportunity and have a best of luck for that.
Thanks, Chintan.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one on your touch tone phone. Anyone willing to ask a question, you may press star and one now. If you wish to ask any questions, you may press star and one. We have a follow-up question from the line of Harsh Pathak from Emkay Global Financial Services. Please go ahead.
Yeah. Hi, sir. Thanks for the follow-up. You highlighted that we have leased the space in Zentech for INR 150 per square foot. If you can throw some light on how the micro market is and what the prevailing rates are and this rate of INR 150 per square foot that we have got, how is it comparable to the micro market and what has enabled us to get this kind of a rate?
Harsh, just to give you a perspective of South Bangalore market, I think first and foremost, this asset, what we are building is one of the best really asset that is there in the micro market. From a perspective of IKEA coming and choosing us as a product because IKEA does a very, very long due diligence before finalizing any place, especially for the retail operations. So for them to come over, that clearly says about this product which is clearly by far the best product available in the South Bangalore market. Number one. Number two, the ongoing rentals for retail vary. This asset is bang opposite Forum Mall in Bangalore, and the rentals over here in this micro market are in the range of INR 100-INR 120 a square feet.
The reason why we were able to get a higher rate is because of the quality of the asset, the way it has come up, as I said. There is an entire layout. The frontage of the asset itself helps in the overall sales for IKEA. Just to give you a perspective from the rentals perspective, the INR 100- INR 120 is the range in South Bangalore, and we were able to get a rate of around INR 150.
Sir, and how does the pipeline look for the remaining space in Zentech?
It looks very healthy. As I said, I was just saying in the other call. It looks pretty healthy right now. We started sales in April of this year. We have already done almost 15% of the area. As we speak, every month, we are selling some area, monetizing some area. We are very hopeful by end of this year we will be able to substantially reduce our inventory in Zentech. Especially with IKEA coming in, it really helps us to increase the price further because it becomes a landmark by itself. That will further help us to get a higher value and further realization.
Right. And with respect to Aerocity, how are we placed there in terms of leasing activity?
Aerocity is coming up very, very well. We are expecting OC to come by December for both the towers, which is around 1.3 million sq ft. There is lot of inquiries that is being generated on a daily basis. We are hopeful that in quarter three and quarter four we will be able to get an anchor to start with the leasing activity in that asset.
Sure. We are having a third asset also. What are the timelines there? Have we finalized something? Where are we in stage of the progress?
That asset, we are at the final stages of closing on the legal due diligence. I think we should be able to sign the sale deed by September end, and we are hopeful that by quarter four of this year we will start pouring concrete.
Sure. Coming back to the residential space, how does the BD pipeline look for the remaining of the year? I guess we have done a commendable work in the first quarter. How are we placed for the remaining of the year, and where would our focus be in terms of the region selection?
You mean to say for the west region or you mean about the south region?
No, the overall. In terms of mix of the regions, where are we focused more? Because I guess in the first quarter, we have done a lot of additions in west and also in the Bangalore side. How do we intend to take the BD pipeline forward for the remaining part of the year?
Bangalore is our headquarters, and also we are quite strong in Bangalore, and we have done extremely well in closing deals in the last one year or so. We will continue to do that. At any given point of time, we are evaluating more than 20- 25 opportunities, and some of the things which are closed also are not announced. Then of course, we are in Chennai, and Chennai, that actively we are pursuing, and now there are four projects which are going on. Cochin, we have become quite large in Cochin, and one of the project is expected to launch. Again, there also we are pursuing. Hyderabad, we are pursuing, even though we have not had great luck. Hyderabad, we are pursuing. We are coming to the end of the project in Goa. We are looking for some assets in Goa as well.
These are all no definitive things can be told. Everything has to match, and our return on our investments and our ability, our matching our company's philosophy of the product, and all those things have to match. Then we go forward in all these locations because we have put the hard work and the knowledge investment has been done in all these places. We will continue to be aggressive and pursuing opportunities.
Likewise for the west region, I think we are growing, especially in Mumbai and obviously looking at opportunities in Pune. We will expand further in Pune in the near term. Also in Mumbai, there is huge scope for us to further grow, and we are evaluating opportunities based on our strategic goal, what we want to achieve. I think we are looking at opportunities more than giving a definite number.
Sir, in terms of overall quantum, last year we did around INR 11,000 crore of BDs. This year, any number we have in mind? We look to at least cross this, or is there some target?
As I said, there is no target. We do not go after target, we must close this much. It is about number of opportunities that come in in terms of, at the end of the day, it is not about race to close the deal. It is a race to be profitable on all projects the way we expect it to be. So we can say that it will be as healthy as anything that can be. Without getting into the numbers, it will be healthy this year as well.
Perhaps, we will continue to grow the way we are growing our business, and that growth will continue going forward also.
I think two inputs from my side there are, A, on a thumb rule basis. Thumb rule, what you sell a year. Now, for example, as an organization, if you are selling about 5 million- 7 million square foot a year, I think the thumb rule logical target would be to replenish your land bank by that much every year, right? So as you keep going forward, that much production, and if not more, you keep increasing volumes as well. But I am just saying as a thumb rule, that would be the number. But most importantly, I think is the change in strategy in terms of business development as well. So today, we are able to replenish this in three formats. One being outright, second being joint developments, and now the new bucket in the western region, which is the society redevelopment.
The latter two basically come at a relatively much lesser upfront capital cost because these are joint developments and society redevelopments. So that comes at a much lower cost. The third point being, again, as a strategy, we are extremely clear that all the new BDs, in fact, what have been done over the last two, three years, these are projects which are clean, clear, converted lands, where the target to the team is that from the time you acquire, you need to turn around on an average six to eight months. You need to get these projects to launch. So there is no sort of aggregation, or aggregation risk, or conversion risk, or approval risk per se, as a new strategy for the BDs that we have been doing over the last two years. So you are going to see a faster turnaround.
Sure. Thanks for that elaborate answer. Just two final bits from my side. Are we looking at any pre-sales growth target this year? And second, in terms of debt, I think this quarter sequentially, we have seen some decline in the net debt levels. Even the cost of debt has gone down. So how should we think in terms of net debt going forward? Just these two things.
Harsh , it is difficult for us to put a number there, but what I can say is that given that all the Resi you have seen, that the Resi per square fit has actually come down, and that will continue to obviously pare because whenever the project goes under production- Automatically, it is a self-pairing. Where we have continued to increase our debt level per square feet is on the commercial side, because that development continues on the capital asset side.
Until that time, we either do a strata sales or leasing. That would take some more time to start obviously getting pairing. Resi, I think, I am not really concerned at all. As far as commercial is concerned, there is no concern as such, but obviously it will show some increase per square foot. But eventually it will taper down, as Rajat was also mentioning that we are looking to at least do the OCs for almost 2 million square feet this year. To that extent, obviously, slowly we would start seeing some pairing after that.
I think an easier way to understand that is, I think you classify the debt into essentially three buckets, right? The first bucket being the debt which is on under-construction projects. Now these projects are selling well, collections are good, burn rates are good, which means that there is absolutely no concern it will be self-pairing. The second bucket you look at is the debt that has come on account of business development. Like I mentioned a little earlier, extremely clear that any BD that we do has to be clean clear, which means from the day we do the transaction, the designing starts, approval starts, and the target being six to eight months to launch. That in mind, that is the second bucket of debt.
Again, there, if you are able to follow even 90%, 95%, where we are able to turn these projects around and get them launched in six to eight months, again, that goes into production in that sense. So it is a productive debt, and with the sales collections it will get paid down. The last bucket is the debt against the commercial. Now commercial, the debt is on essentially three projects. The one which we are anyway going to be monetizing by the year-end, so that debt should be paid off automatically. The other one, for now, we are hoping to complete construction by December, and as the leasing starts, you convert that construction finance into LRD at a much lower cost. Again, with the rentals that you collect, it will be self-pairing. I think just to sort of put it into perspective.
Yes. Thanks a lot again for the detailed answer. Just on the pre-sale growth, any target or-
When you say growth, you are comparing it to the last year?
Yes.
Yes, of course.
No, no, I mean any targeted number we have in mind just now.
No, we have never given a guidance or a number, but definitely there will be a growth in that number. With the kind of launches that we have planned, especially over quarter three and four. If you look at the kind of locations and the spread that we have. Within Bangalore, the kind of spread that we have, and even the Cochin project, the following phase. Phase one of which has done extremely well. Execution is happening extremely well. So that is a great location. Again, we have had a great experience in that project. Again, you come to Bombay, if you look at the kind of spread that we have across the city from different price points, Thane, Lokhandwala, Pali Hill, et cetera. Again, very unique locations.
The reason I say that in terms of while the micro markets are great, but the property itself, I think the frontage, the size, and scale of these projects. For example, in Bandra, most projects, if you are from Bombay, in that entire vicinity, they are standalone towers with no amenities. We were fortunate to get the site, which is 2.75 acres. So we are able to pack in every single amenity, and that is the USP of that site. We are in designing phase. The office receives almost 10 to 15 inquiries a day. Have you opened up sale? Have you opened up sale? So within the Bandra market, there are so many people who want to move into a larger development that provide you a lifestyle and a lot more of amenity than what existed in the small plot car, single tower developments.
Understood. Thanks, Ashish, for taking my questions. Thanks a lot.
My pleasure.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have our next question from the line of Chintan Mehta from Puniska Family Office. Please go ahead.
Sir, just wanted to know, we have any more land parcel or space at Aerocity to launch something commercial or residential?
We have Grand Hills project, which is there as part of our launch pipeline. That is there. Apart from commercial, that is a Resi, obviously, which is coming up. If you see in slide number 16, you can see number three, Grand Hills actually pertains to that same Aerocity site which you are referring to.
Behind Aerocity. Part of same campus.
Okay. Further after that, we are looking at a big one to develop that area?
Phase one of that Aerocity project, the total commercial is about 2.2 million square foot. What we are completing by December will be 1.2 million square foot, and then we hope in January we start the phase two of the commercial, which is another million square foot. That micro market is really developing well because of the metro connectivity. The entire micro market, you have the best of schools, you have Resi, you have offices, you have hospitals. The best of schools are in that vicinity. Once the metro starts, the entire micro market like Outer Ring Road five years ago, the entire place will get revalued in that sense. Then at the back, currently what we have designed is 2.2 million square foot of office space in the front, and at the back Resi. The whole walk-to-home concept.
Okay. Thanks, sir. That is the detail I wanted to know. Thank you so much, sir. All the best to you.
Sure. Thank you.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. As there are no further questions, I now hand the conference over to the management for closing comments. Over to you, sir.
Thank you all for your time and questions. We appreciate your continued support and interest in Puravankara's journey. Should you have further queries or require additional information, please feel free to reach out to our Investor Relations team. We look forward to updating you on our progress in the coming quarters. Have a great day and a nice weekend. Thank you so much.
Thank you, sir. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.