REALTY MAJORS HOPING TO CASH IN ON FESTIVITIES

Firms with strong brands and track records are launching a slew of projects this season

Listed property developers are hoping to see a significant uptick in sales in the ongoing festive season. Whether it is DLF in the NCR, or Godrej Properties and Oberoi Realty in Mumbai or Sunteck Realty and Prestige Estates in Bengaluru, most top players have lined up a slew of project launches this season. RAGHAVENDRA KAMATH writes

D espite prolonged slowdown in the real estate sector, listed property developers are hoping to see a significant uptick in sales in the ongoing festive season. Whether it is DLF in the National Capital Region (NCR), or Godrej Properties and Oberoi Realty in Mumbai or Sunteck Realty, Prestige Estates and Sobha Realty in Bengaluru, most top players have launched or lined up a slew of project launches this season.

At the end of March this year, the country ’s top 25 developers were sitting on unsold inventory worth nearly ~1.4 trillion — up 19 per cent, year on year. However, those launching new projects have manageable levels of inventory and believe their strong brand and balance sheets will do the trick.

Prestige Estates’ unsold inventory is equivalent to 23 months of its sales. The ratio is 17 months for Godrej Properties, 21 months for Sobha and 16 months each for Oberoi Realty and Brigade Enterprises. Inventory up to 18 months of sales is considered healthy.

October to December 15 is peak sales season for real estate developers, after which sales decline. The other period for brisk business is in summer.

This festive season, Godrej Properties has launched two projects in Mumbai — in Kalyan and Kandivali — and one each in Pune and South Delhi.

“We see a big opportunity in the slowdown to scale up our business. We are adding new projects and entering new micro-markets to deepen our presence and increase our market share in four key growth regions (Mumbai, Pune, Bengaluru and NCR) identified by us,” said Pirojsha Godrej, Chairman, Godrej Properties. He said the company has seen a good uptake in its recent launches and hopes to continue to build on the momentum in Q3 and Q4.

Other real estate firms are also unveiling new projects. Oberoi Realty is launching phase three of its Goregaon project in Mumbai and Thane project in Q3. Company sources said it got good response to its recently-launched residential tower on the JogeshwariVikhroli Link Road in Mumbai.

“We don’t think the markets are down for developers who have a strong balance sheet and a good track record. In fact, this is the right time to get aggressive, since we have access to the best talent, resources and customers,” sources in the company said.

Analysts, too, believe projects launched at this time will get good sales traction. “With mortgage rates hovering between eight and nine per cent and developers focusing largely on the mid-income/affordable housing segment to drive volumes, we expect strong traction in sales volumes in H2FY20 across the board,” Adhidev Chattopadhay, research analyst at ICICI Securities, said in a recent report.

Thanks to the number of unlisted developers grappling with high debt, funds crunch and stalled projects, homebuyers have become more discerning over the past couple of years. Even so, there is enough interest in launches from leading developers with a strong execution record, Chattopadhyay said.

“If the product, pricing and location are right, the product is selling. Unsold units are either unaffordable or at wrong locations,” added Balaji Rao, managing partner at Axis Asset Management.

Amit Goenka, chief executive and managing director at Nisus Finance, a Mumbai-based fund manager, said though the ban on subvention schemes has hit property sales to some extent, developers are expected to come out with deferred payment schemes for buyers.

“The launch of affordable projects by listed, branded players have found favour with buyers. New launches should do well,” he said.

According to Chattopadhyay of ICICI Securities, unlike the Mumbai and NCR markets, the South India market continues to see stable demand, with developers focusing largely on middle-income and affordable housing launches. Firms are also doing what they can to push sales. For example, Prestige Estates held an activation event called ‘Keys 2019’ on October 11-13, where it offered various schemes across its projects. Prestige also has several launches lined up in the year’s second half.

Brigade Enterprises and Sobha Realty, too, are launching new phases or projects across south India.