Limited
launches and a slow pick-up in demand, despite a marginal price correction in a
few markets, may result in muted sales for real estate companies
Analysts are hopeful
that the property market may recover in the second half of this fiscal year on
the back of lower home loan rates. Photo: Pradeep Gaur/Mint
|
Mumbai: India’s largest real estate companies are
likely to see muted sales and profit growth in the quarter ended 30 June owing
to limited new launches and a slow pickup in demand, despite a marginal price
correction in a few markets.
Analysts are hopeful that the property market may recover in the second
half of this fiscal year on the back of lower home loan rates and other
measures introduced by the government such as implementing the Real Estate
(Regulation and Development) Act and amending real estate investment trust
norms. So far this year, the BSE Realty Index has gained 21% compared with a
7.5% rise for the Sensex.
“Historically, it is a slow quarter. NCR (National Capital Region)
market is not doing well at all. Hence, this will reflect in the sales of DLF
as well,” said Samar Sarda, lead analyst (real estate), Kotak Institutional
Equities, a brokerage firm.
Home sales in NCR, the country’s largest property market, continued to
decline while sales in Mumbai picked up in a few areas. While demand for mid-income
houses continued to grow, sales of homes priced above Rs.1 crore
are yet to pick up even in markets like Bengaluru and Pune.
“Enquiries are … not being translated into actual purchases. However,
commercial continues to do well,” said Adhidev Chattopadhyay, real estate
analyst, Elara Capital Ltd.
Despite weak performance in the residential segment, commercial real
estate continued to be the bright spot as leasing activity for offices,
particularly in Bengaluru, grew year-on-year. But that is not enough to salvage
the June quarter financials.
According to a report by brokerage firm HDFC Securities Ltd, aggregate
sales of the top six listed companies, including DLF Ltd, Oberoi Realty Ltd,
Bengaluru-based companies Prestige Estates Projects Ltd, Sobha Ltd and Brigade
Enterprises Ltd, and Pune-based Kolte-Patil Developers Ltd, is likely to
decline by 3.2% in the June quarter compared with a year ago. Aggregate profit
is expected to fall by 9.1%.
“New launches have come down significantly as developers are focusing on
monetizing existing unsold inventory. Inventory (has) come down to 42 months
(six-quarter low). Prices are muted with 10-15% discount offers which have
helped in a volume uptick,” the report said.
DLF may see a marginal increase of 0.3% from a year ago in its June
quarter net sales to Rs.2,240.7 crore, a Mint poll of five brokerage firms said. Net
profit is estimated to rise 14.7% to Rs.139 crore mainly owing to a rise in rental income,
particularly from its newly launched Mall of India at Noida.
The company is currently in the process of selling 40% stake in its
commercial property arm, DLF Cyber City Developers Ltd, to institutional
investors to raise aboutRs.12,000 crore. This is
expected to help reduce its net debt, which currently stands at around Rs.22,202
crore.
Mumbai-based Oberoi Realty is expected to fare better because of a
pickup in its Esquire project, launched late last year. Analysts forecast a 40%
jump in its net sales to Rs.296 crore while its net profit is expected to increase
by 19.7% toRs.94 crore.
“Last year, Oberoi Realty saw two big launches after a gap of two years.
Sales from Esquire made a big difference in the first quarter as the project
started contributing only by the fourth quarter last financial year,” said an
analyst with a brokerage firm on condition of anonymity.
Bengaluru-based companies such as Prestige Estates Projects, Sobha and
Brigade Enterprises are expected to report marginal decline in volume on yearly
basis, mainly due to lack of new launches, even as they have robust annuity
portfolio coupled with a strong residential launch pipeline in Bengaluru,
according to analysts.
Similarly, sales momentum for Godrej Properties Ltd is likely to remain
slow due to limited new launches in the first quarter. During the period, the
company launched three towers at its 43 acre township project Godrej Infinity
at Pune. The project is jointly developed by Godrej Properties and local
builders Oxford Group and Ekta World.
Credit : http://www.livemint.com/
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