Despite headwinds like RBI rate hikes and increasing cost of raw materials, the residential real estate market, especially at the luxury and super-luxury ends, remains buoyant, says Aakash Ohri, Group Executive Director and Chief Business Officer, DLF—the country’s largest real estate developer.
Confident of achieving its revenue guidance of ₹8,000 crore for FY23, Ohri says there has been some postponement in real estate purchases because of an increase in home loan rates but it has not had much effect on end-user purchases or on DLF’s sales numbers.
A property upcycle in recent times– the last 18 months saw 35 million sq ft being carved out by DLF– has seen real estate re-emerge as a stable investment over other market-linked or other high-risk asset classes, which have been hit because of volatilities.
“Demand is buoyant and we remain cautious as there are some headwinds leading to an increase in the cost of credit for buyers. Premium and super-premium homes have yet again emerged as a stable asset for investors, and it seems this upcycle will continue for sometime now,” he told buisnessline during an interview.
In Q1FY23, DLF Ltd. reported consolidated revenue of ₹1,516 crore, an increase of 22 per cent year-on-year, and margin stood at 53 per cent. Net profit was ₹470 crore, up 39 per cent YoY. New sales booking clocked ₹2,040 crore, a 101 growth YoY.
And nearly 75 per cent of total sales were from new launches in the June quarter. For instance, at The Camellias, DLF’s super-luxury offerings, delivered a booking of ₹350 crore in Q1FY23 and new offerings during the period garnered sales of ₹1,532 crore.
According to Ohri, new launches for DLF are up over pre-Covid times, and there is a demand for larger homes too. The average home size is around 1,800–2,000 sq ft and goes up to 2,500 sq ft; the sizes are up now at 2,400–3,000 sq ft.
“However, it does not mean we don’t have the smaller offerings of 1,800 sq ft. But, market value realisations for the larger home sizes are higher,” he said, adding that: “While rising interest rates may pose some challenges, we expect the structural recovery in the residential segment to continue.”
According to him, DLF’s recent launch, The Grove, another low-rise luxury offering in the independent floor segment, will see revenue contributions of upwards of ₹1,700 crore (which will be reflected in the books from Q3FY23 onwards). The Grove will offer 292 luxury residences with 4 BHK, 4 BHK + entertainment lounge on plot sizes ranging from 225–539 square meters.
Capex on new products is split into two – one, which is in the books of the DCCDL platform, where investments will be between ₹1,200 and 1,500 crore over the next 3–5 years (across DLF Downtown in Gurgaon and Chennai, Mall of India in Gurgaon, and Vasant Kunj mall expansion). Then, there are office and retail projects on the DLF platform, which include the IT Park in Noida, the new DLF Avenue Goa, the High Street Shopping Centers in Phase-V in Gurgaon and in Midtown, which will entail an investment of ₹400–500 crore a year.