MAX ESTATES On Road to Focused Real Estate Growth in Delhi NCR

Riding high on its strong performance, Max Ventures & Industries Limited (MaxVIL), one of the three holding companies of the USD 4.5 billion Max Group and the holding company for the Max Group’s real estate business, Max Estates is on a high growth path, building a well-diversified commercial and residential real estate portfolio across Delhi-NCR.

The FY 23 performance of MaxVIL points to the healthy growth path being chartered by the group.   Revenue increased by 6% YoY to INR 1,073 million in FY23.  Consolidated PBT was up by 418% YoY to INR 221 million in FY23 while the onsolidated PAT stood at INR 170 million in FY23 vs. INR 47 million in FY22. The total Lease Rental Income (Max Towers + Max House) went up by 30% YoY to INR 483 million in FY23. Max Asset Services revenue stood at INR 358 million in FY23, up by 50% YoY.

Strong Leasing Momentum

Max Estates’ completed Grade A+ office projects – Max Towers and Phase 1 of Max House are 100% leased at 25-30% premium to the micro market. The collections continue to be on time and in full. The premium earned is in line the organisation’s Workwell philosophy, which ensures holistic wellbeing of its users, enabled by a unique ecosystem of spaces including F&B and several amenities, as well as acceptance and appreciation of its impeccable service standards and design led sustainable developments.

The total leased area owned by Max Estates in Max Towers Noida continues to be 100% occupied.        Lease rental income from Max Towers stood at INR 340 million in FY23. Max House Okhli, New Delhi, Phase 1 continues to be 100% occupied.   Lease rental income from Max House Phase 1 stood at INR 143 million in FY23. Max Square Noida project received its Completion Certificate in February 2023, in a short span of 30 months. The development has obtained the highest green building standards certification from IGBC, and is IGBC Platinum certified under the Green New Buildings Rating System. Total leasable area amounts to 0.7 million sq. ft and New York Life Insurance Company is a 49% partner in the project. The Company has built a robust pipeline at advance stages of closure with several clients and is confident to fully lease the project within 12-18 months of completion.

The work on Max House Phase 2, Okhla, New Delhi is on track and is expected to be completed by Q2FY24. Max House Phase 2 is an extension of Max House Phase 1, with a larger leasable area of 0.15 million sq ft. The company which is getting good traction in terms of the demand from both existing and new clients is confident to fully lease the project within 12 months of completion, including significant proportion to be pre-leased.

Upcoming Projects 

Residential Developments

Maxwell Estates Limited has signed a joint development agreement (JDA) for its its upcoming residential project in Sector 36A, Gurugram with a development potential of 2.4 million sq ft, having a gross development value of INR 3200 crores.  The land parcel admeasures 11.8 acres with direct access from the Dwarka Expressway. The site is also strategically located at the confluence of the expressway, Central Peripheral Road (CPR) and planned Metro Corridor, by virtue of which, this site has excellent connectivity to central and secondary business districts of Gurugram such as Cyber City, Golf Course Road, and Southern Peripheral Road (SPR). The project will develop into one of region’s first intergenerational community at scale. The company estimates to launch the project in first half of CY 2024.

For the second residential project coming up in Sector 128 Noida, building plan has been approved.  It will be a boutique development promising an elevated quality of life through pioneering design, wellness, and sustainability aspects, and will cater to the premium end of the residential market. The gross development value of the project is estimated to be over INR 1,300 crores.

Despite the global macro-headwinds and rising interest rates, the demand for residential segment pan-India has remained strong. Changing consumer preferences towards ownership, significant improvement in affordability quotient of citizens, and resilience of the domestic economy have been the key driving factors for the rising demand. In addition, the industry is also going through significant consolidation, which has led to incremental market share gains for organised players.

The total gross development value between Max Estates’ two planned residential developments is estimated to be over INR 4500 crores. The company aspires to expand its residential footprint further across Delhi NCR in near to midterm.

Commercial Developments

Consequent to the completion of acquisition of ABPL (Acreage Builders Private Limited), it has become a step-down wholly owned subsidiary of the Company through Max Estates Ltd. Further, New York Life Insurance has been onboarded as an equity co-investor in ABPL. MEL and New York Life shall be 51:49 shareholders respectively in ABPL and shall collaborate to develop commercial office and retail project on a 6.24-acre land. It has a license to develop commercial project over an area measuring 7.15 acres, utilizing the asset of ABPL, located at Golf Course Extension Road, Gurugram. The developable leasable area is 1.6 million sq ft with a revenue potential of INR 160 – 200 crores per annum. The company has onboarded Gensler, a global architecture, design, and planning firm as principal architect to design a customer centered sustainable office development, factoring in ‘future of office’ trends. As per the current plan, the construction will begin at the site in Q3 FY 24.

In addition, MEL is in the final stages of acquiring ~4 acres of commercial licensed land from Axis Bank in Sector 129, Noida, via its subsidiary Max Square Limited, where New York Life is a 49% Joint Venture Partner. The land is adjacent to its existing development – Max Square, and both land parcels combined have a total development potential of 2 million sq ft. spread across the 6.6 acres campus. This will not only provide prospective tenants of Max Square an option to expand, but also enable access to an integrated mixed-use campus that will be unique to this micro market. The development will have direct access to the Noida-Greater Noida Expressway, offering excellent connectivity to and from Noida, Delhi and broader Delhi NCR via both road and metro. The design of the development is in its final stages and the construction is expected to start in Q3 FY 24.

Mixed Use Developments

Following the NCLT approval of the Resolution Plan, for the development of a commercial plot measuring 34,697 sq. mtrs. located in Noida under the project name ‘Delhi One,’ the additional development footprint of 2.5- 3 million sq ft will be added to the portfolio of Max Estates. The implementation of the Resolution Plan is subject to receipt of requisite approvals from regulatory and statutory authorities.

The company, over the last 12 months has scaled up its real estate portfolio from 2 to 8 million sq. ft. of development potential, which is very well diversified across asset classes (Residential and Commercial), geography (Noida, Delhi and Gurugram), and risk spectrum in terms of delivered, nearing completion and under design projects. To enable execution at scale, the company has significantly upgraded its bandwidth and capability over the last 12 months, focusing on attracting top quality talent, particularly to build its residential vertical. It also undertook several strategic initiatives to strengthen systems and processes, including transition to SAP as its new ERP platform, digital interventions across the value chain, as well as embracing ESG best practices across the organization with participation in GRESB ranking this year for the second time.

The recent global environment has significantly accelerated the flight to quality phenomenon. Consumer willingness and appetite to pay premium for quality development has also increased, and consumers are now looking to prioritise experience and well-being. As a corporate developer with a key focus on delivering quality experiences catering to the holistic well-being of its users, the above phenomenon is a highly positive sign for the company

Looking Ahead

Going forward, the corporate structure of the Group will be simplified following the merger of MaxVIL with Max Estates Limited On the composite scheme of amalgamation whereby MaxVIL will merge with Max Estates Limited. This will enable the company to re-name the entity as Max Estates – a move that will resonate with real estate as the only focus of the company. This will bode well for Max Estates which is making significant strides to establish itself as a leading real estate brand in Delhi NCR, with focus on the well- being of its consumers and all its stakeholders. According to Sahil Vachani, MD & CEO, Max VIL, with a clear purpose, strategy and aspiration, Max Estates (MEL) is looking to accelerate its growth journey by building on its current portfolio spanning 8 million. sq. ft. and adding at least 1 million sq. ft.  each to commercial and residential portfolio. Anchored on its operating philosophy of WorkWell & LiveWell, MEL aims to deliver design and hospitality led differentiated consumer experiences, beginning with the launch of its first residential project of Delhi-NCR in Sector 128 Noida in mid-2023.