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India is a country where home or office buying is an emotional moment as everyone’s dream is to own a “little bit of concrete for themselves”. Real Estate is one of the fastest growing industries of India today. The major players in the sector are Indiabulls, DLF, Lodha group, Hiranandani etc. These players have diverse portfolios, deep pockets and thorough understanding of legal and environmental agents. The biggest barrier for entering the sector is Brand Equity and incessant flow of money. Well, one conglomerate i.e., Reliance Industries Limited has got both the things and more. Its diverse portfolio also mitigates the risk and helps Reliance grow even further. Reliance has the power of backward and forward integration, thereby reducing the per unit cost.
The Background:
RIL is all set to make some significant changes in the Real Estate sector with the launch of its new offshoot - Reliance Jai Properties Private Limited (RJPPL). It was officially incorporated on 12th Aug, 24 with a capital of Rs. 1 lakh. The Real Estate industry currently values $200 billion. It seems they are ready to capitalise on this incessant growing industry. RJPPL is a subsidiary of Reliance Energy Ltd. The company has issued 10K equity shares worth Rs 10 each. Although they have started with a modest beginning, it is certain they aim to grow very rapidly.
Impact of RJPPL in Real Estate Sector:
Currently the Real Estate industry is somewhat fragmented with majorly small players at global and regional level. RIL’s entry into this sector has the ability to reshape the industry by a large magnitude as the company is known for its reach and quality. RIL can provide various types of properties. On one hand the lower segment will focus on the mass requirement with the trust of RIL, on the other hand a world class finesse is expected in the Luxury and Ultra Luxury segment.
Urban development and other infrastructural development will be expected to follow given the history of RIL’s metamorphoses strategy wherever they go. Large scale operation and strong financial background may bring about technology integrated residential and commercial patch of concrete. With RIL setting a new benchmark the competitors will have a tough time. Investors and customers will be benefitted by this move as they have more choices.
The Road to future:
The government is all set to change the face of India as allocating Rs. 48k Cr for the development of Smart Cities etc. Initiatives like the Pradhan Mantri Awas Yojana (PMAY) has shown the vision of the government. The budget for infrastructure-related ministries is Rs. 5 lakh crores in FY24. Urbanization, higher income level and infrastructural development indicate that RIL chose the ripe time for better harvest. People will have keen eyes to witness what this move of Reliance unfolds for the sector and country in future.
Thank you.
Regards,
Kautilya, IBS Mumbai.
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