Godrej Properties buys TDR certificates for Gurugram project

Godrej Properties has purchased Transfer of Development Rights (TDR) certificates from an individual for Rs 50 crore for its Sector 43 project in Gurgaon, a practice common in Mumbai but just getting started in the NCR region. This will help the company construct an additional 300,000 sq ft of area, with a total revenue potential of Rs 900 crore, said people with knowledge of the matter.

Landowners can get TDR certificates from the Haryana government when their land is taken for development projects in lieu of monetary compensation. These certificates can later be sold to developers at market rates.

CBRE, transaction advisor for the deal, didn’t respond to queries. Godrej Properties declined to comment.

According to people familiar with the deal, nearly 1,000 TDR certificates were generated with a floor area ratio (FAR) of 2. The majority of these certificates carried a face value of 50 sq m each, while some certificates were issued with a face value of approximately 77 sq. m., resulting in a total area of approximately 1 million sq ft.

The certificates have been bought by Godrej Properties for their group housing project in Sector 43.

“Since the TDR generated was from the Golf Course Road extension and the project is on the Golf Course Road, the adjusted area for Godrej will be around 300,000 sq ft. The developer is expected to launch the project at Rs 30,000 sq ft, the total revenue from the extra area would be Rs 900 crore,” said one of the persons aware of the deal.

The transaction will spur the purchase of TDRs across projects by developers in Gurgaon, which was earlier more prevalent in cities like Mumbai.

The company recorded a 473% increase in sales in Gurugram in FY24 from the year before and has a strong launch pipeline for FY25, which includes new projects in Sectors 103, 43 and 54.

In July 2023, Godrej Properties emerged as the highest bidder for two luxury group housing plots in the Golf Course Road micro market in Gurgaon. One of them was in Sector 43, for which Godrej Properties has purchased TDR. The projects, spread over 2.76 acres and 5.15 acres, will have a combined estimated revenue potential of about Rs 3,100 crore.