“We have exited two cities completely, Nagpur and Hyderabad, and we are holding back any investment in Delhi NCR right now,” said Amit Kumar Sinha, managing director and chief executive at Mahindra Lifespace. Location and price points matter as the company is focusing on sustainable living and net-zero buildings, he said.
Sinha told Mint that success in Mumbai doesn’t ‘easily translate’ to other parts of the country. “Approvals, construction need a lot of local understanding of players, contractors, etc. so I want to consolidate our market position in three cities,” he said.
Mahindra Lifespace is, therefore, narrowing its pan-India footprint and will “aggressively” focus on only three cities: Mumbai, Pune and Bengaluru, Sinha said. The company will factor in their sustainability goals for any future acquisitions, besides concentrating on bringing the existing land bank to the market.
“We have a lot of land banks in Chennai and Jaipur. We are bringing them to market as we speak,” Sinha said. “We also have some land parcels in Mumbai now, including Thane and Bhandup, which are very large.” As for Pune and Bangalore, the company will follow the model of buy, launch, monetize and buy the next one, he said.
Net zero focus on acquisitions
“We are a young, upcoming, strong brand, which wants to differentiate in the market. Why not make sustainability a theme and net zero a theme so that we can lead the industry in this area?” Sinha said. “Many of our competitors have taken the lead in some of the other areas so we have to find our mission.”
Mahindra Lifespace built its first net zero energy residential project, Mahindra Eden in Bengaluru, in 2022. It was certified by the Indian Green Building Council (IGBC). Its first net zero waste and energy project, Mahindra Vista at Mumbai’s Kandivali East, was launched in February this year and two-thirds of the flats were sold out within the first three days. The company also launched Mahindra Zen in March 2024 in Bangalore as a net zero waste and energy project.
The company looks at net zero in three ways: energy, waste and water.
Net zero energy means producing little to no carbon emissions while using electricity. To achieve this, Mahindra Lifespace has tied up with companies that supply green electrons or renewable energy. The company has secured special approvals from the Bangalore administration for this. This adds an extra cost per kilowatt hour so the company is also focusing on ways to cut down energy consumption per user. This includes using custom-made glass to control heat and light, rooftop solar and wind energy setups, and more.
For managing waste, the company has hired vendors that incinerate the waste produced by the society residents or decompose it to use it as manure. The idea is to not send waste to landfill, Sinha said. For net zero water, the company is building systems for rainwater harvesting and creating an offset, that will replenish a waterbody somewhere else for the water consumed by the society residents. The company recycles steel rebars and uses bricks made out of steel waste.
Likely challenges
Several constraints, however, may not allow the developer to plan net zero projects everywhere.
“If a city does not have the ability to supply green electrons, we can’t just change that. Net zero water projects in cities like Jaipur and Bangalore are also going to cost a lot,” Sinha said. “So, our goal is every year, whatever we launch, a higher portion of those launches should be net zero.” The company’s target is to have 100% net zero launches by 2030.
Making a net zero project also puts pressure on the company’s costs. Out of the 8-10% profit margin on a project, the company is taking a dent of 1% to make the output sustainable. “We are taking a small dent today for a longer brand value going forward,” Sinha said.
According to Deben Moza, senior executive director—head of project management services, Knight Frank India, constructing a sustainable building can cost 7-10% higher than a conventional building. “Your capex, which is the initial expense, is higher, but in the long run, your energy bills are far less than a conventional building as you have efficient systems in place.”
Another challenge is that customers are also not ready to pay a premium for sustainability today, Sinha said. Charging a premium will still depend upon location, brand name, amenities and space, among other things. The company expects this trend to change over time, due to growing awareness around sustainability.
“It’s a good strategy. It’s like taking responsibility to themselves, and I think Mahindra can do that,” said Pankaj Kapoor, founder and managing director at Liases Foras, a non-broking real estate research firm. “It’s smaller developers that may not really take such a call.”
In the short term, it may be a costly affair for them, but in the long run, it will be paying off because the reason is it’s net zero – eventually, it will be saving costs for the people, so they will generate loyalty among the customers and it’ll improve sales, Kapoor said.
Sustainability has become an important part of discourse in Indian real estate. Modern strategies are getting adopted across residential and commercial assets, including insulating outer walls and floors, heat efficient glazing, green roofing and AI-driven smart systems for efficiency, according to a KPMG x Colliers report on sustainable real estate.
Rising focus on sustainability is compelling developers to use recyclable construction materials, optimize heating and air conditioning systems, use advanced glass technologies, etc, the report said.
“It’s not that overnight things will change, but slowly customers are becoming more aware of sustainability,” Moza said. “So there is pressure on developers from customers who do a thorough due diligence on how construction is being done and what sustainability measures have been taken.”
Funds and private equity players that are funding developers who comply with sustainability and ESG norms, so there’s pressure from such funding agencies too, according to Moza.
Business goals
Mahindra Lifespace has set a goal to achieve ₹8,000-10,000 crore worth of pre-sales by FY28. To achieve this, the company plans to scale up gross development value to ₹45,000 crore from its current potential GDV of ₹22,650 crore.
With the Bhandup and Thane acquisition, at least two-thirds of the company’s land requirement for the ₹45,000 crore target is fulfilled, Sinha said.
In terms of capex, the company requires ₹7,000-7,500 crore. The cost is expected to come down if the company pursues more society redevelopment projects as it doesn’t require too much capital outlay.
For funding future projects, “half of this we have in our accruals – operating cash flow, half we are trying to solve for,” Sinha said. “Some of this will be through debt, private equity platforms as well as working with our parent Mahindra – they are very much behind us.”
The parent company, which owns 51% stake in the company, does not wish to dilute more stake, Sinha said.
Last month, Mahindra Lifespace tied up with Japan’s Sumitomo Corporation for the second phase of their joint industrial parks project in Tamil Nadu. The company, through its subsidiary Mahindra World City Developers, and its partner will together invest ₹225 crore in Mahindra Industrial Park Chennai Ltd, in proportion to their existing shareholding.
The company is getting interest from other Japanese investors and certain discussions are underway, Sinha, without disclosing any other details.
