DLF, Unitech set to miss launch targets big time

India’s biggest two realtors by market capitalisation are set to miss their residential launch targets this year.

DLF Ltd had guided investors that it would launch/sell 12-15 million sq ft this fiscal, while Unitech Ltd had to deliver 23.1 million sq ft by the end of the second quarter.

At the end of the July-September quarter, DLF officials had guided that the company will reach the lower band of the estimate, or 12 million sq ft.

But in the first nine months of this fiscal, DLF has launched only a quarter of that at 4.5 million sq ft.

Similarly, Unitech managed to deliver only a third of its target at 8.6 million sq ft, leaving 14.5 million sq ft to be delivered before the end of the fiscal. These pertain to projects launched before March 2009.

A report by IIFL, the brokerage, on Thursday said, “DLF intends to launch close to 5 million sq ft in the fourth quarter, which we expect will help it achieve close to 10 million sq ft of sales for the fiscal. This would imply a 20% volume decline.”

DLF had launched a plotted development in the September-December quarter in Sector 72 of Gurgaon.

It was looking at launching similar projects at Panchkula and Mohali, apart from villas in Indore.

The story is the same at Unitech, the other New Delhi-based major. Unitech reported sales volume of 2 million square feet in the second quarter, and it is expected to report a similar number in the September-December quarter, taking the total area to be launched for sale at 10 million square feet for the current fiscal, the IIFL report said.
This would lead to a volume decline of 37.5 % compared with last year when Unitech sold 16 million square feet.

Though the company has adopted a new strategy of selling residential apartments only in projects where it has already started constructing, IIFL said "the 40% year on year decline in volumes has been accompanied by a close to 40% increase in average selling price. Clearly, real estate asset prices have run ahead of growth in household disposable income.”

Unitech has also started land acquisition from the last quarter and intends to invest close to Rs150 crore each quarter for the same, R Nagaraju, CFO of Unitech had told DNA after the company’s second-quarter results in October last.