Oct 19 2011
drive sales and tackle a crimped cash flow and profit
Gone are the days of exclusive and expensive real estate deals. Of late, the developers seem to believe that new projects at “right value” may revive their fortunes. The falling sales have crimped cash flows and profits, forcing the developers to rethink their strategies. Pradeep Misra, founder director of REPL, a Delhi-based urban planner, believes the industry has devised a way to overcome the cash crunch. “The developers are launching new, economically viable projects from their available stocks. This will convert their assets in stocks into current assets and will improve cash flow. Cash inflow in a project is always much better initially than at the latter stage,” says Misra.
According to a spokesperson of Unitech, which has recently launched a project called Crestview Apartments in Gurgaon, the company expects to generate booking-sales of Rs 400 crore from the project.
The builders agree unanimously that if the projects are seen as value-for- money, there will be demand for them. Says Abhisheck Lodha, managing director of Lodha group: “There is a strong demand if you have a good product at the right price.” Brotin Banerjee, managing director and chief executive officer of Tata Housing Development Company echoes the same sentiment. “Demand for projects, which are at the right location and are priced reasonably still exists,” says Banerjee. Tata Housing Development Company has launched a new project in Thane-Kalyan Road called ‘Amantra’, which proposes 2,500 apartments starting at approximately Rs 40 lakh with a minimum size of 927 square feet.
“The developers are launching new projects in areas where the demand is slightly better and are not affected by the local factors,” confirms Ashwani Prakash, executive director of Paramount Group of Companies.
According to Getamber Anand, managing director of Delhi-based ATS Group, and vice-president of Credai, who also perceives a demand for value-for-money projects, “ATS Group is planning to launch a mid-segment residential project at Sector 109, Gurgaon, along the northern periphery road this festive season to cater to such demands. The project is spread across approximately 12.2 acres and will be competitively priced (in the range of Rs 4,000-6,000), offering value-for-money to investors. The proposed residential project will come in three basic unit sizes: 1,745 sq ft, 2,095 sq ft and 3,045 sq ft. Renowned architect Hafeez Contractor will be the master architect for the Gurgaon project. The inhouse construction team of ATS will follow strict quality standards to ensure excellent product delivery.”
Similarly, Marathon Realty, the real estate arm of Mumbai-based Marathon Group, has launched Marathon Nagari-NX, a township, in Badlapur near Mumbai. Marathon Nagari-NX is coming up on six acres of land, approximately, and comprises over 500 apartments ranging from Rs 15-20 lakh.
In fact, almost every leading developer such as Godrej Properties, Unitech, Tata Housing, Marathon Group, Hiranandani Developers and a number of other smaller players have launched or are in the process of launching new projects, across the country. For some small developers, bookings could help ease the strained cash flow situation as they find themselves starved of equity funds and bank loans. Even larger firms are pinning their hopes on a positive response to new projects from customers who have been deferring their purchases due to high interest rates on housing loans.
The developers also hope that the festive season will boost the sales further. Says Milind Korde, managing director of Godrej Properties. “Traditionally, retail residential sales during the festive season, beginning Navratri, herald the peak period for the industry generating between 50 and 60 per cent of segment sales for the year. This period that extends up to Christmas, is believed to be auspicious and is preceded by inauspicious periods during which most middle class households would loathe to book a flat.” NSE-listed Godrej Properties has launched one project each in Bangalore and Nagpur recently.
According to Prakash, developers are also being cautious while launching new projects — besides the general market conditions, various other local and political factors are apparently taken into consideration. The situation in Chennai is a good example of the external factors affecting the growth of the industry, which should essentially be peaking during this period. Chennai has not witnessed a flurry of new projects, thanks to slow clearances. “When no approvals are coming through, where is the question of cashing in on the festive season demand? Essentially, it is only builders with finished projects to offer, who are able to take advantage of the seasonal demand. Some builders, who have already obtained approvals from the earlier regime for some of their projects, are also able to cash in on the festive demand,” says T Chitty Babu, managing director of Akshaya Homes and president of Credai-TN.
In Kolkata, too, the situation is different from, say, Delhi or Mumbai. The only major launch by an organised sector property developer in the city during the festival season has been ‘Atmosphere’, a super luxury residential condominium project being built by the Kolkata-based Forum Group. Nilesh Biswas, director of Calcutta Skyline, a leading realty research and brokerage firm believes that limited availability (only 80 units) is bound to generate demand despite the higher prices. “The location and easy access and connectivity are great advantages too. The pricing of the property may be is on a higher side, but that should not be a problem. This will therefore, surely help the developers improve their cash flow situation significantly.”
According to a spokesperson of Unitech, which has recently launched a project called Crestview Apartments in Gurgaon, the company expects to generate booking-sales of Rs 400 crore from the project.
The builders agree unanimously that if the projects are seen as value-for- money, there will be demand for them. Says Abhisheck Lodha, managing director of Lodha group: “There is a strong demand if you have a good product at the right price.” Brotin Banerjee, managing director and chief executive officer of Tata Housing Development Company echoes the same sentiment. “Demand for projects, which are at the right location and are priced reasonably still exists,” says Banerjee. Tata Housing Development Company has launched a new project in Thane-Kalyan Road called ‘Amantra’, which proposes 2,500 apartments starting at approximately Rs 40 lakh with a minimum size of 927 square feet.
“The developers are launching new projects in areas where the demand is slightly better and are not affected by the local factors,” confirms Ashwani Prakash, executive director of Paramount Group of Companies.
According to Getamber Anand, managing director of Delhi-based ATS Group, and vice-president of Credai, who also perceives a demand for value-for-money projects, “ATS Group is planning to launch a mid-segment residential project at Sector 109, Gurgaon, along the northern periphery road this festive season to cater to such demands. The project is spread across approximately 12.2 acres and will be competitively priced (in the range of Rs 4,000-6,000), offering value-for-money to investors. The proposed residential project will come in three basic unit sizes: 1,745 sq ft, 2,095 sq ft and 3,045 sq ft. Renowned architect Hafeez Contractor will be the master architect for the Gurgaon project. The inhouse construction team of ATS will follow strict quality standards to ensure excellent product delivery.”
Similarly, Marathon Realty, the real estate arm of Mumbai-based Marathon Group, has launched Marathon Nagari-NX, a township, in Badlapur near Mumbai. Marathon Nagari-NX is coming up on six acres of land, approximately, and comprises over 500 apartments ranging from Rs 15-20 lakh.
In fact, almost every leading developer such as Godrej Properties, Unitech, Tata Housing, Marathon Group, Hiranandani Developers and a number of other smaller players have launched or are in the process of launching new projects, across the country. For some small developers, bookings could help ease the strained cash flow situation as they find themselves starved of equity funds and bank loans. Even larger firms are pinning their hopes on a positive response to new projects from customers who have been deferring their purchases due to high interest rates on housing loans.
The developers also hope that the festive season will boost the sales further. Says Milind Korde, managing director of Godrej Properties. “Traditionally, retail residential sales during the festive season, beginning Navratri, herald the peak period for the industry generating between 50 and 60 per cent of segment sales for the year. This period that extends up to Christmas, is believed to be auspicious and is preceded by inauspicious periods during which most middle class households would loathe to book a flat.” NSE-listed Godrej Properties has launched one project each in Bangalore and Nagpur recently.
According to Prakash, developers are also being cautious while launching new projects — besides the general market conditions, various other local and political factors are apparently taken into consideration. The situation in Chennai is a good example of the external factors affecting the growth of the industry, which should essentially be peaking during this period. Chennai has not witnessed a flurry of new projects, thanks to slow clearances. “When no approvals are coming through, where is the question of cashing in on the festive season demand? Essentially, it is only builders with finished projects to offer, who are able to take advantage of the seasonal demand. Some builders, who have already obtained approvals from the earlier regime for some of their projects, are also able to cash in on the festive demand,” says T Chitty Babu, managing director of Akshaya Homes and president of Credai-TN.
In Kolkata, too, the situation is different from, say, Delhi or Mumbai. The only major launch by an organised sector property developer in the city during the festival season has been ‘Atmosphere’, a super luxury residential condominium project being built by the Kolkata-based Forum Group. Nilesh Biswas, director of Calcutta Skyline, a leading realty research and brokerage firm believes that limited availability (only 80 units) is bound to generate demand despite the higher prices. “The location and easy access and connectivity are great advantages too. The pricing of the property may be is on a higher side, but that should not be a problem. This will therefore, surely help the developers improve their cash flow situation significantly.”
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