Listed property developers expect better days after first quarter

After a “washout” in the June quarter, property developers expect a pickup in residential sales from July-September, like last financial year.

In FY21, home sales picked up after Q1 because states such as Maharashtra announced stamp duty cuts and banks offered special interest rates.

This, coupled with affordability and pent-up demand, pushed up residential sales in the nine remaining months of FY21. Since April this year, many states have announced lockdowns, which have caused a lull in residential sales.

Godrej Properties (GPL) Chairman Pirojsha Godrej expects a muted first quarter in FY22. “We expect to see a significant impact in the first quarter but we would like to quickly scale up with new launches and expect momentum to pick up from the second quarter,” Godrej said during a recent conference call with analysts.

Adhidev Chattopadhyay, an analyst with ICICI Securities, said: “GPL’s FY21 bookings rose by 14 per cent YoY even in a challenging year and with 19 new launches lined up in FY22, we expect the firm to target YoY growth in FY22 bookings even as the second Covid wave across India is expected to impact H1FY22 sales bookings.” Sunteck Realty Chairman Kamal Khetan said not much stock was available now because no new launches happened in recent months. “The second wave has made people look at buying homes seriously. In Q1 last financial year, lockdown was strict and sales were not happening. This year sales are happening despite the lockdown,” Khetan said.

Oberoi Realty Chairman Vikas Oberoi said April and May looked like washouts.

“In the lockdown, we were not allowed to show our flats. Once lockdown is lifted, we come to know how momentum picks up,” he said in a call with analysts.

Oberoi recorded its highest ever quarterly bookings at Rs 2,000 crore, driven by its latest launches. Motilal Oswal Real Estate Chief Executive Sharad Mittal said: “The recovery witnessed by the sector over the past nine months was more long-term and was a factor of strong growth-led fundamentals in the sector. While this lockdown will cause a temporary blip, demand will remain strong over the next 24-36 months.” Since there has been a shutdown in most of south India, the real estate business has been severely impacted.
 

“Primary business for us comes from Bengaluru, so this market will start giving results after the lockdown is lifted. If things normalise, we should be back in business in a good way from the second quarter of FY22,” said Swaroop Anish, executive director (business development), Prestige Estates. The company is hopeful of a 15-20 per cent increase in sales over last year.

“There could be better price realization, the need for schemes would go, and we would get back to more traditional offers,” he added. “We are hopeful that vaccination, conducive market trends and primarily positive customer sentiment will lend stability to the real estate landscape and sustain growth in FY22 as well. External factors, such as the pricing of the raw materials, could influence customer sentiment,” said Ashish R Puravankara, managing director at Puravankara.

Land buys

Despite the challenges in the property sector, cash-rich property developers such as Oberoi Realty and Godrej are looking to buy land parcels due to current conditions of developers. “We will continue to buy land. It is the best time to buy land as the coffers of most developers are empty,” Oberoi said.