Conglomerates strike a gold mine in land assets

A surge in property prices after the covid pandemic has made real estate an attractive opportunity for Indian conglomerates, which are rapidly expanding their realty businesses.

- Nehal Chaliawala & Dipali Banka

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

Among this set of conglomerates are the Raymond Group, Larsen & Toubro (L&T), the Kirloskar Group, the Shapoorji Pallonji Group, the Wadia Group and the Aditya Birla Group.

The Kirloskar Group, known for manufacturing engineering equipment, established a real estate company called Avante Spaces in 2020 to build its corporate headquarters in Pune. Now, it plans to scale the company by building commercial real estate and leasing it out. Avante Spaces will focus on developing the group’s vacant land, including about 70 acres held by Kirloskar Industries. 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.