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Home > News > Realty Players Betting Big In Fy13

Realty players betting big in FY13

Infrawindow News Bureau


Realty players betting big in FY13


May. 07, 2012, 10:41 AM

Realty players betting big in FY13The real estate sector may still be in a slump, but big developers are bullish on demand for residential property in the country. They are going ahead with plans to launch several projects in 2012-13 as they expect sales to be better than the previous financial year.


While Godrej Properties plans to launch around 15 projects in 2012-13, Oberoi Realty expects to develop around 33 lakh sq ft. The country’s largest developer DLF is planning to develop around 10-12 million sq ft during the same period. They all hope that the repo rate cut of 50 basis points by the Reserve Bank of India in April is likely to boost demand.


Equity analysts tracking the sector are, however, not so optimistic. Surojit Pal, an analyst at Elara Capital, said, “While Oberoi Realty has enough cash, Godrej Properties has an asset light model and are mainly doing projects through joint development. DLF is in a tight position and the company is planning to reduce its high debt. At present, sales are low and going forward, I don't see any quick revival in the near future.”


Pirojsha Godrej, managing director and chief executive officer, Godrej Properties, said, “Last year, we had launched five projects but this year, we plan to launch around 15 projects in the existing 12 cities we are already present as we are bullish about the residential demand.” Most of them are residential and will be funded through internal accruals and partly through debt. At present, the company has debt-equity ratio of 1.06.


Godrej said in January-March, the company’s Ebitda margins declined to 25.4 per cent against 27.3 per cent year-on-year. “We have increased our property prices and our sales have also gone up. But our input costs have increased significantly.” Cost of labour, steel and cement have gone up, he said, adding that the rise in input cost is hurting company’s margins.


A senior official from DLF said the company plans to develop around 10-12 million sq ft of space in 2012-13. “Most of the projects will be residential projects. We plan to launch them in the existing 18 cities we are already present,” said the official. DLF plans investment for the projects through internal accruals and cash flow generated from existing projects and new project launches.


“Every month, we generate cash of around Rs 500-600 crore through our sales,” said the official.


Oberoi Realty is also preparing to launch around 33 lakh sq ft of proposed development space in 2012-13 as it looks for a home for its surplus cash. “We will launch around 33 lakh sq ft of property within this financial year which is expected to be completed in the next couple of years. These properties will generate revenue of around Rs 5,000 crore for us when sold,” said Vikas Oberoi, CMD of Oberoi Realty.


The company plans to launch a project each in Mulund, Worli and the third phase of Oberoi Exquisite in Goregaon-east. These properties in Mumbai will aggregate to 33 lakh sq ft of space. While the Mulund and Goregaon developments will be residential projects, Worli will be a high-end luxury project with mixed-use residential and commercial components.


Oberoi Realty, at present, has no plans to raise funds and would use its cash balance for the construction of the properties. As of the year ending March 2012, the company had cash balance of around Rs 1,300 crore with zero debt. Oberoi claimed that they have increased property prices by around 10-15 per cent from March 30, 2012 to pass on input costs to consumers.

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