Prestige Estates: A Real Estate Giant with Ambitious Rental Income Growth

Prestige Estates Projects Limited is making significant strides towards becoming a dominant annuity-led real estate developer. The company is aiming to scale its office rental income substantially in the coming years, backed by strong leasing demand and a robust development pipeline. This strategic move is designed to enhance cash flows while maintaining financial discipline.

With a market cap of Rs 69,647 Crore, Prestige Estates Projects Ltd saw its stock hit an intraday high of Rs 1622.80, marking a 1.1 percent increase from the previous close of Rs 1604.65. Over the past three years, the company’s stock has delivered a compounded return of 51 percent, reflecting its strong performance and investor confidence.

Prestige Estates’ ambitious target is to grow its office rental income to Rs 3,300 crore by FY28 and Rs 4,000 crore by FY30, from the expected exit rentals of Rs 828 crore in FY26. The company currently operates 9.41 million square feet of office space, with an additional 38 million square feet under development. This expansion will take the office portfolio to around 47 million square feet in the future.

Beyond office rentals, Prestige Estates is also strengthening its annuity platform in retail and hospitality, further diversifying its income sources. Retail rental income is projected to reach Rs 275 crore in FY26 and Rs 1,092 crore by FY30. This growth is supported by operations across five malls with a combined leasable area of 1.87 million square feet, and 12 more malls in the pipeline, totaling nearly 12 million square feet.

The hospitality segment is emerging as a key growth driver, with rental income expected to grow at a 53 percent CAGR over three years, reaching a cumulative income of around Rs 2,510 crore as the company expands its footprint to 50 million square feet.

This strategic approach has allowed Prestige Estates to self-fund and calibrate growth while preserving its balance sheet. The Managing Director, Irfan Razack, emphasizes the company’s commitment to long-term value creation without compromising financial prudence.

The expansion plans are well-timed, given the supportive office market environment in India. Leasing activity across the top seven cities has reached 71.5 million square feet, marking a 6 percent year-on-year increase. The fourth quarter of the calendar year recorded an all-time high absorption of 20.6 million square feet, up 20 percent from the previous quarter. Bengaluru, Prestige Estates’ home market, saw the highest absorption with 8.1 million square feet, followed by Delhi NCR with 4.2 million square feet, reflecting the sustained demand for Grade A office spaces.

Incorporated in 1997, Prestige Estate Projects Ltd is a Bengaluru-based real estate developer with a diversified presence across residential, office, retail, hospitality, property management, and warehousing. The company operates in 12 major cities across India, having completed 310 projects with 202 million square feet and currently working on 65 projects with 126 million square feet. Additionally, 65 upcoming projects with 73 million square feet are in the pipeline, with a Gross Development Value of Rs 44,823 Crore.

In Q2FY26, Prestige Estates reported a YoY revenue growth of 5.5 percent, increasing from Rs 2,304 Crore in Q2FY25 to Rs 2,432 Crore in Q2FY26. The QoQ growth was 5.4 percent, from Rs 2,307 Crore in Q1FY26. The company achieved its best-ever first half, with sales of Rs 1,81,437 million and collections of Rs 87,356 million, surpassing the entire FY25 full-year sales.

Breaking down the half-yearly numbers, the residential segment contributed 81 percent, the office segment 9.4 percent, rental space 3.6 percent, and the remaining 7.4 percent came from services such as property management, interior services, and construction contracting. The company also has unrecognised revenue of Rs 60,568 Crore.

In terms of geographical distribution, 45 percent of sales came from NCR, 27 percent from Bengaluru, and 16 percent from Mumbai, with the rest from other regions. The YoY Net Profits grew by 94 percent, from Rs 235 Crore in Q2FY25 to Rs 457 Crore in Q2FY26, while the QoQ growth stood at 46 percent from Rs 312 Crore in Q1FY26.

Prestige Estates’ strategic focus on annuity income, coupled with its strong financial performance and market position, positions the company for continued growth and value creation in the Indian real estate sector.