Low-cost switch is paying off: Unitech

Unitech Ltd, the country’s second-biggest property developer, says its strategy to focus on affordable residential housing for mid-income consumers is getting an encouraging response.

It launched its second mid-income housing project in Gurgaon early this week after closing sales of an earlier one on the nearby Sohna Road. It said it sold over 500 apartments at its planned township, called North Town, in Chennai two weeks earlier.

“We have launched the project after getting a good response for the recently launched projects in Gurgaon and Chennai. The launch of new mid-income residential housing projects has improved the operating cash flow of the company,” said an official who did not wish to be identified.

Due to cash crunch and almost no demand for some of its luxury projects, Unitech had stopped the launch of new projects for about five months. It has now changed its strategy.

The company says it is also planing to launch projects in the range of Rs 5-10 lakh an apartment in Gurgaon, Chennai and Kolkata, among other places.

Earlier this month, Unitech raised $325 million (Rs 1,625 crore) from selling new shares to institutions. It plans to use a part of the money to develop its affordable housing segment. The developer plans to launch 40 such projects during the fiscal year ending 2010, aggregating 30 million sq ft.

The company is trying to keep prices in the range of Rs 30-50 lakh, which calls for a price of close to Rs 3,000 per sq. ft. The new project, ‘The Residencies’, is located in Sector 33 of Gurgaon and offers two and three-bedroom apartments at a basic price of Rs 3,295 a sq ft.

The cost of a two-bedroom apartment with a “super area” of 1,100 sq ft would be a little over Rs 36 lakh, while a three-bedroom apartment of 1,535 sq ft would cost a bit over Rs 50 lakh.

Without disclosing the number of apartments to be launched, the official said, “We are testing the market with a soft launch and will decide the apartments to be developed in a few days”.