Sculpting the future of luxury living

September 2024

Company Overview

Mr. Mehta is the CEO and MD of one of the largest real-estate businesses in India with ~INR
65,000 Cr of cumulative sales in the last five years. His company, Mehta Developers Limited
(MDL), has built a presence in key metro cities in India. Mehta Group enjoys a dominant
position in the Mumbai Metropolitan Region (MMR) with 10% market share and an estimated
~76 million sq. ft. of prime real estate under development (ongoing & planned). Mehta Group
also has large land reserves of over 1,000+ acres for future growth in this region. In terms of
offerings, Mehta Group provides comprehensive office, residential and retail space solutions
across diverse consumer segments.

• The Group has several landmark developments in the residential space across both
mid-income and premium luxury segments.
• The Group’s commercial portfolio comprises of office spaces, IT campuses, high-end
corporate offices and boutique office spaces.
• In addition, they also manage retail projects such as malls and other high-street retail
shopping options.
• The Group has also entered the digital infrastructure space to cater to the growing
need arising out of the digitization of the economy.

MDL has been synonymous with luxury living in Mumbai’s premium, urban locations that
shape urban lifestyles. Lately, the MDL group has also adopted the vision to deliver premium
living experiences with ample amenities, open spaces, a higher standard of living, and a
peaceful quality of life through privately-managed, large-scale, city-like developments
spread over numerous acres of land.

The demand for luxury homes in India is surging due to several factors, including a rise in ultra-
high-net-worth individuals, a shift in lifestyle preferences, an increased focus on wellness and
comfort, and high-end amenities. There is a rise in demand in aspirational and larger
developments, offering a higher quality of life. The strategic question MDL faces is to identify
and evaluate the next development vision to capture this market.

MDL’s portfolio in the region currently consists of MyCastle, a brand that caters to the mid-
income segment, offering a complete lifestyle with multi-segment developments. Along with
Disclaimer: The name and details mentioned in this case are fictitious and only meant for case competition. Any resemblance to real-world entities will be
purely coincidental
residential units, these projects include commercial spaces, and essential amenities such as
schools, hospitals, and shopping centres, creating self-sustained communities that prioritise
liveability.

Building on its success in high-rise premium towers with 1, 2, and 3 BHK units, MDL is now
exploring a new frontier: plotted villa developments. This venture marks the company’s first
foray into creating luxurious, villa-style homes, offering the same commitment to quality and
exclusivity in a new, spacious format.

With a proven track record in large-scale, township-like developments that integrate all
modern amenities, MDL continues to push the boundaries of luxury real estate, crafting
communities that resonate with modern lifestyles and aspirations.

Case Context

The Group owns a 75-acre land parcel located in the lush village countryside of Mankri, a 45-
minute drive to north-east Mumbai. The site features flat, fertile land interspersed with 2
quarries, offering a tranquil and visually striking landscape. Just a few minutes’ drive from a
seasonal river, this area combines the serenity of rural life with the unique charm of these quarry
ponds, presenting an exceptional opportunity for a distinctive development. Though separate
from urban centres, the site benefits from its proximity to the established MyCastle township
with ~2500 residential units (across price-segment), high-street retail, commercial offices, city
metro/rail station (government infrastructure) and open green parks.

The objective of this exercise is to create a strategy for launching ‘Villament’ developments in
the selected parcel.

Key aspects of consideration shall be:

• Identifying the right target group, market size and developing the right positioning
strategy as this will be a product category previously not seen in the MMR (Typical
developments in the same price range are apartments with a 2-3 BHK configuration)
• Evaluate and pick from the 3 potential business models
• Sell Only Plots
• Sell Plotted Villas
• A third option can also be considered – a combination of plots and villas

Your team will present your case to the Group’s Strategy Lead.

In a previous presentation to the CXO suite, the following comments were captured –

Chief Executive Officer – “The Mankri land parcel will be a pioneer in establishing the product
success story and broaden the firm’s portfolio to include Villaments at other locations as well”.
Mankri parcel is likely to compete with destinations like Alibaug, Karjat and Lonavala. It is
imperative to innovate and create strong ‘magnets’ that will attract potential customers. We
should be able to make higher margins as compared to apartments in this product category.

Chief Customer Officer – “The consumer sentiment in buying a house is undergoing a dramatic
shift. Some customers buy at young age; some rent around workplace but prefer buying a
holiday home; some are buying their ‘second’ or ‘holiday’ home. Identifying the target
customer for Mankri project will be an interesting journey.”

Chief Marketing Officer – “Monsoon time makes it a challenge to bring customers to site. I
would love to hear some strategies to improve our lead sourcing to site visit conversion.”

Disclaimer: The name and details mentioned in this case are fictitious and only meant for case competition. Any resemblance to real-world entities will be
purely coincidental
Chief Sales Officer – “Since this is a new product we would be looking at capturing Market
Share from other product types in a similar price segment across MMR, we should target to
capture the ~10% luxury apartment market”.

Chief Sustainability Officer – “We need to be able to make tangible benefits for the buyers as
well as the community to continue leading a shift towards sustainable development.” Evaluate
ways to make meaningful contributions in the ESG domain.

Chief Finance Officer – “Financial metrics are important to be tracked to validate strategic
calls.” Consider comparing absolute profits, profits % and profit per acre along with the usual
metrics and compare with MyCastle. Currently, we are able to make ~25-30% margins in our
apartment offerings.

Guidelines on proposal documents and format

Participant team to prepare a strategy document (in PPT format) capturing following key
elements -

• Executive Summary consisting - 3-4 slides total | 10% weightage

o Project overview and summary of options evaluated
o Opportunity assessment- a brief strategic assessment highlighting rationale for your
proposal
o Brief summary on product strategy, customer strategy, marketing strategy,
sustainability strategy, sales & distribution strategy with rationale
o P&L summary

• Detailed Analysis on - 1-2 slides each | 70% weightage

o Customer Strategy – Target customer profiling, market sizing, customer
segmentation (by location, product type)
o Product Strategy – Product segmentation (Sizing, phasing etc., amenities and
‘magnets’ (i.e. key features)
o Distribution Channel Strategy – Sales channels by customer type, channel-wise
focus and/or targets
o Go-To-Market Strategy – Overall marketing narrative, channels, channel-specific
communication
o Sustainability Strategy – Tangible options to benefit capex/opex, improve ESG, etc.

• P&L projection & Pricing Strategy 2-3 slides + Excel calculation file | 20% weightage
o A detailed P&L projection for the project with key metrics for project evaluation
across all options with the correct price points for selling.

Additional Instructions

• Please make necessary assumptions and state them clearly in the presentation document
• Use appropriate formatting (font type, size, indentation) to keep the content easily
readable
• Provide references to all data and/or information sources
• If required, add detailed slides, pictures/video relevant to any segment above in annexure
section of the presentation

Disclaimer: The name and details mentioned in this case are fictitious and only meant for case competition. Any resemblance to real-world entities will be
purely coincidental
Annexure-1: Glossary of Terms

• RERA – Real Estate Regulation Act, a recently enforced set of regulations that govern how
developers and builders must function.

• Built-up Area (BUA) – Gross or total covered area of a building. BUA = Carpet area + Area
of interior & exterior walls + Balcony/Deck area + Unusable areas (Stairs, Chajja, Lobby
etc.)

• Carpet Area – Area of the standard unit (flat, retail, office etc.) excluding exterior walls
but including area under internal walls. As per RERA regulation, unit pricing must be on
Carpet Area only.

• FSI (Floor Space Index) – It is the ratio of a building’s total built area divided by plot area
upon which building is built. Local governing body sets a maximum limit on FSI ratio that is
permitted for developing a building. A lower FSI value means that development will consist
of low-rise buildings with more open areas which is preferred for luxury developments
whereas high FSI value means development consists of high-rise buildings.

• Fungible FSI – Additional floor area that can be constructed by a developer beyond the
maximum permissible FSI limit set by the local governing bodies.

• PSF (Per Square Foot) – It is a standard unit of measure in real estate sector for pricing and
costing.

• Product – Products in real estates are residential units (flats - 1 BHK, 2 BHK, 3 BHK etc.), retail
shops (200 sq.ft. to 500 sq.ft.), offices (300 sq.ft. to 30,000 sq.ft.), villas (2500 sq.ft. to 5000
sq.ft.)

• Construction Cost – Cost incurred towards a building. It includes associated costs such as
cost of parking building/basement, cost of amenities like gym, parks etc.

• Sales & Marketing Cost – Cost incurred towards marketing of the project and cost incurred
towards sales such as promotions to customers, incentives/brokerage paid to sales
agencies driving sales, cost of building & running sales office, sample flat/unit.

• Phasing – Phase-wise planning for launch of buildings. For example, a developer may
decide to launch 1-2 buildings at a time or 4-6 buildings at a time depending on their
confidence level of sales.

• Mid-income residences – These are residential units with carpet area ranging from 500
sq.ft.
(2 BHK) to 1200 sq.ft. (3 BHK)

• Luxury residences – These are large residential units with carpet area ranging from 1500
sq.ft. to 4500 sq.ft.

• Magnets – Magnets are development features and attraction points of the overall
development outside the residential building.

• Micro market – Micro market is the smallest unit of ‘market’ in real estate. It is the target
market of typically 5-10 km radius market around the land/location under study.

In case of ‘second’ home market, the radius is sufficiently large to cover similar ‘second’
home locations. For example, target market for Mankri will cover real-estate markets of
Karjat, Alibaug, Lonavala.

Disclaimer: The name and details mentioned in this case are fictitious and only meant for case competition. Any resemblance to real-world entities will be
purely coincidental
Annexure-2: Real estate market sizing and competitive landscape

1. Market size of total luxury residential developments in Mumbai City (INR crore)

Parameter 2018 2019 2020 2021 2022 2023

Western Suburbs 22900 24400 26000 27700 29500 31400

Central Mumbai 4900 6900 9700 13600 19100 26900

Eastern Suburbs 6200 8000 10200 13100 16800 21500

CBD - Mumbai 3600 4500 5700 7200 9100 11500

Central Suburbs 5500 6200 6900 7600 8500 9400

2. Market size of total luxury residential developments in Eastern MMR (INR crore)

Parameter 2018 2019 2020 2021 2022 2023

Thane 3800 4400 5200 6100 7200 8500

Navi Mumbai 600 800 1200 1600 2200 3100

Mira-Bhayandar 100 100 200 300 500 900

Kalyan-Dombivli 100 200 200 300 400 400

Bhiwandi 200 450 300 400 200 100

Thane 3800 4400 5200 6100 7200 8500

Navi Mumbai 600 800 1200 1600 2200 3100

3. Market Share of MDL in MMR amongst Grade-A developers’ market

Parameter 2018 2019 2020 2021 2022 2023

Luxury 5% 7% 10% 15% 25% 30%

Mid-income 25% 30% 38% 42% 42% 45%

Disclaimer: The name and details mentioned in this case are fictitious and only meant for case competition. Any resemblance to real-world entities will be
purely coincidental
Annexure-3: Cost and Price estimate for luxury and mid-income product segments

1. Inputs for P&L statement

Description of Parameter Plot Plot + Villa MyCastle

FSI 0.6 0.6 2.5

Carpet Area (% of built-up area) 100% 85% 75%

Construction Cost* (per sq.ft. of built-up area) 0 5000 4320

Sales & Marketing Cost (% of revenue) 5% 5% 5%

Project Contingency Cost (% of construction 10% 10% 10%

cost)

Average increase in Selling Price (annually) 15% 10% 4%

Land Purchase Price (INR/acre) 5 5 5

Liaison Cost (% of revenue) 2.5% 2.5% 2.5%

Admin & Overheads (% of revenue) 3% 5% 5%

Infrastructure Development Costs 2 2 5

2. Pricing trend of Grade-A players for mid-luxury projects around Mankri

Pricing Trend
10500

10000

9500

9000

8500

8000
2018 2019 2020 2021 2022

MDL Competitor-1 Competitor-2 Competitor-3

Disclaimer: The name and details mentioned in this case are fictitious and only meant for case competition. Any resemblance to real-world entities will be
purely coincidental
 3. Yearly distribution of costs, sales and cash collections for typical MyCastle projects

Schedule Structure Year-1 Year-2 Year-3 Year-4

Construction Cost
25% 50% 25% 0%
(tower phasing)
Sales Volume
70% 15% 10% 5%
(% of units sold)
% of Collections
50% 25% 15% 10%
(from year of sale)

4. Yearly distribution of costs, sales and cash collections for a typical Villa project

Schedule Structure Year-1 Year-2 Year-3 Year-4

Construction Cost
40% 60% 0% 0%
(Villa + Plot)
Sales Volume
(% of units sold)
Data Not Available (Needs to be estimated)
% of Collections
(from year of sale)

Disclaimer: The name and details mentioned in this case are fictitious and only meant for case competition. Any resemblance to real-world entities will be
purely coincidental