Developers plan big launches to push sales after covid 2.0
BENGALURU : Top real estate developers have lined up a slew of housing projects for a July launch as they wait for a complete lift of the lockdown restrictions imposed during the second wave of the pandemic.
Sales of new residential properties which have risen steadily since the coronavirus outbreak last year stagnated when the second wave hit in March, prompting builders to postpone launches.
While this quarter would be a failure for both sales and launches, it is expected that the bulk of FY22 sales could come from new launches slated for the second half of this fiscal year.
DLF Ltd had launched projects totaling 1.5 million square feet in 2020-2021. Encouraged by improved sales, it is stepping up and targeting 8.3 million square feet of residential housing launches this fiscal year. In the coming years, India’s largest real estate developer plans to launch around 35 million square feet of projects over the next few years.
“We believe these launches will improve the sales trajectory,” Edelweiss Securities Ltd said in a report on DLF.
Likewise, Bengaluru-based Prestige Estates Projects Ltd has plans to launch residential projects of 12-15 million square feet between July and December in southern India, Noida and Mumbai.
The company had launched 4.7 million square feet of new projects in the March quarter, accounting for 30% of the gross sales value of FY21 of ₹5,460 crores.
Prestige did not offer any sales forecasts during its recent post-profit call, but indicated that it expects demand to pick up sharply in all segments from the September quarter if the impact of the second wave fades in the coming months. Much of the company’s focus will remain on middle-income projects, as well as a few location-based luxury projects.
“There is a huge pipeline of new offerings expected to hit the market. The second wave shook the market unfortunately following a good recovery curve. The pent-up demand has been largely consumed and we need to see how the new launches are received by home buyers. But builders cannot stay in the field too long and have to launch projects to monetize them, ”said Pankaj Kapoor, Founder and Managing Director of Liases Foras Real Estate and Research Pvt. Ltd.
Kapoor estimated that after a lull in launches of almost a year, around 70,000 homes were launched between January and March 2021. Before the covid outbreak last year, around 90,000 launches took place each quarter. .
Macrotech Developers Ltd, which operates under the “Lodha” brand, plans to launch around 4.3 million square feet of new projects in the Mumbai Metropolitan Area (MMR) and Pune, according to its investor presentation. The developer is entering new micro-markets with the new launches and will also expand in Pune, outside of its main market of Mumbai.
Another Mumbai-based developer, Oberoi Realty Ltd, plans new launches in the second fiscal half of Thane and projects underway once foreclosure restrictions are relaxed, brokerage firm ICICI Securities Ltd said in a note. May 17.
While the timing and number of launches is expected, ICICI Securities expects Oberoi Realty to record sales of at least ₹2500 crore and ₹3,500 crore in fiscal years 22 and 23, respectively, due to new launches and completed or near-completed inventory in projects in Mumbai.
Meanwhile, some automakers plan to raise prices despite the weak market. Akash Ohri, executive director of DLF Home Developers Ltd, said last week on a call to post-earnings analysts that there had been a price increase of ₹1,500 per square foot in its Gurugram project which sells independent floors. DLF has also reduced discounts on its luxury Camellias project. DLF management also said June quarter sales were affected by the second wave, but they expect to maintain a sales trajectory of more than ₹1,000 crore per quarter for the remainder of this fiscal year and in fiscal year 23. DLF targets bookings of ₹4,000 crore in 2021-22 thanks to its strong pipeline of launches.
Kapoor said a price hike might not appeal to customers well in the current scenario. “There are many factors that have contributed to the recovery of the housing sector, including a 5-20% reduction in the cumulative cost of apartments last year due to reduced stamp duties, among other factors. But margins have really gone down for builders and most reported less revenue in 2020-21. So they have to go out and start projects and do a price hike if necessary, ”he said.
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