Real estate sales expected to improve after Diwali
The Hindu Business Line, March 30, 2009, Page 3
MD of Orbit Corporation says they are prepared for the slowdown.
S. Shanker, Mumbai, March 29
Orbit Corporation is among the top real estate companies in Mumbai that cater to the high-end residential and commercial segments, primarily through redeveloping old and dilapidated properties. It has developed over 1.5 million sq.ft in prime locations of the city and the average price of properties sold has been about Rs 25,000 a sq.ft. The company has 11 lakh sq.ft slotted for completion in 2010 and another 20 lakh sq.ft scheduled for 2013.
Speaking to Business Line, Mr Pujit Aggarwal, Managing Director, shares his views on the real estate scenario and his strategy to combat the slowdown in trying times.
The premium housing segment has probably taken the worst beating in the slowdown and prices have dropped substantially. How much have you lowered prices?
We have cut prices by 30-35 per cent across projects. We are now quoting Rs 50,000 a sq.ft as against Rs 72,000 a sq.ft at Napean Sea Road. Similarly, we have lowered the price from Rs 24,000 to Rs 19,000 at Lower Parel.
What about sales?
The market is difficult. The last three months of 2008 were real bad to say the least. January was better with sale of one super-luxury apartment, while February went blank. March has been good thus far, logging sale of two to three apartments. The rules of the game have changed. Customers with cheque books in hand call the shots today.
What is your strategy at the current juncture?
We are prepared to take a hit. It has been cut-throat bargaining sessions with customers. But then, we have to move on and we cannot be lowering prices in slabs and end up sitting on high inventory. We intend to liquidate stocks and of 11 lakh sq.ft under construction we have sold 6.7 lakh sq.ft. This apart, we have about 2.75 lakh sq.ft in Andheri as well. So, from an unsold total of 7.75 lakh sq.ft, we intend to raise over Rs 1,550 crore over the next year and a half. Our objective is to sell at lower prices to generate cash to acquire distressed assets that come our way. So, any hit we take will be notional which will more or less average out with future projects. The key in these difficult times is timely project execution. We do have a certain amount of headroom in our projects, as once we get the rights from the landlord, a little restraint can be exercised in settlements with tenants and their rehabilitation process.
When do you expect the market to pick up?
Post-monsoon, after Diwali, is when I expect sentiments to improve and sales to kick in.
Do you have plans for entering the affordable home segment?
No. But then we are game if we get an asset with all clearances on board and which can be completed in two years. We understand HDIL has garnered sizable bookings in the segment with the right pricing strategy.
Orbit got Rs 200 crore from a Cyprus-based fund. How has the fund been deployed?
We are going to build beachfront villas near Alibaug. About Rs 110 acres have been acquired with the funds and another 90 acres have been tied up. Contrary to the current scenario, we anticipate no trouble in selling the premium villas of 4000 sq.ft to 15,000 sq.ft each in the price range of Rs 2 crore to Rs 15 crore.
The Hindu Business Line, March 30, 2009, Page 3
MD of Orbit Corporation says they are prepared for the slowdown.
S. Shanker, Mumbai, March 29
Orbit Corporation is among the top real estate companies in Mumbai that cater to the high-end residential and commercial segments, primarily through redeveloping old and dilapidated properties. It has developed over 1.5 million sq.ft in prime locations of the city and the average price of properties sold has been about Rs 25,000 a sq.ft. The company has 11 lakh sq.ft slotted for completion in 2010 and another 20 lakh sq.ft scheduled for 2013.
Speaking to Business Line, Mr Pujit Aggarwal, Managing Director, shares his views on the real estate scenario and his strategy to combat the slowdown in trying times.
The premium housing segment has probably taken the worst beating in the slowdown and prices have dropped substantially. How much have you lowered prices?
We have cut prices by 30-35 per cent across projects. We are now quoting Rs 50,000 a sq.ft as against Rs 72,000 a sq.ft at Napean Sea Road. Similarly, we have lowered the price from Rs 24,000 to Rs 19,000 at Lower Parel.
What about sales?
The market is difficult. The last three months of 2008 were real bad to say the least. January was better with sale of one super-luxury apartment, while February went blank. March has been good thus far, logging sale of two to three apartments. The rules of the game have changed. Customers with cheque books in hand call the shots today.
What is your strategy at the current juncture?
We are prepared to take a hit. It has been cut-throat bargaining sessions with customers. But then, we have to move on and we cannot be lowering prices in slabs and end up sitting on high inventory. We intend to liquidate stocks and of 11 lakh sq.ft under construction we have sold 6.7 lakh sq.ft. This apart, we have about 2.75 lakh sq.ft in Andheri as well. So, from an unsold total of 7.75 lakh sq.ft, we intend to raise over Rs 1,550 crore over the next year and a half. Our objective is to sell at lower prices to generate cash to acquire distressed assets that come our way. So, any hit we take will be notional which will more or less average out with future projects. The key in these difficult times is timely project execution. We do have a certain amount of headroom in our projects, as once we get the rights from the landlord, a little restraint can be exercised in settlements with tenants and their rehabilitation process.
When do you expect the market to pick up?
Post-monsoon, after Diwali, is when I expect sentiments to improve and sales to kick in.
Do you have plans for entering the affordable home segment?
No. But then we are game if we get an asset with all clearances on board and which can be completed in two years. We understand HDIL has garnered sizable bookings in the segment with the right pricing strategy.
Orbit got Rs 200 crore from a Cyprus-based fund. How has the fund been deployed?
We are going to build beachfront villas near Alibaug. About Rs 110 acres have been acquired with the funds and another 90 acres have been tied up. Contrary to the current scenario, we anticipate no trouble in selling the premium villas of 4000 sq.ft to 15,000 sq.ft each in the price range of Rs 2 crore to Rs 15 crore.
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