Realtors may miss H2 launch guidance

Major real estate companies are likely to miss their guidance on project launches during the second half of the current fiscal as buyers keep away due to high interest rates and liquidity crunch continues.

Out of the total 37-42 million square feet (msf) launch guidance announced by six companies—DLF, HDIL, Sobha Developers, Godrej Properties, Prestige Group and Oberoi Realty—only 5.4 msf was achieved in the third quarter.

While the companies are expressing confidence that they would meet the targets in the next three months, industry watchers see large slips due to a non-conducive environment. 

In case most developers meet their second-half guidance, it could mean raining launches in a weak market.

North-based DLF launched 4.5 msf in the October-December quarter against a guidance of 6.5-7.5 msf. This, analysts said, was because of DLF’s strategy to focus on plotted development during the first quarter. Godrej Properties Ltd launched only 0.9 msf against its target of 8.6-9.6 msf. DLF is the only realtor among the six to achieve more than 50% of the guidance.

HDIL, Sobha, Prestige and the Oberoi did not launch properties in the third quarter despite giving bullish guidance.

For the second half, HDIL was targeting 10-13 msf, Sobha (1.7 msf), Prestige (7.7 msf) and Oberoi (2.1 msf).

According to DLF, the company has been able to achieve better part of the guidance owing to due diligence as well as product mix skewed towards plotted developments. “We keep working on a project for a long time, tying up all the requisite clearances, which entails intelligent efforts and due diligence. It is also a good time to launch. Plotted development has been one of our big contributors as it does not require many clearances,” said Rajiv Talwar, executive director, DLF.

He said the company is looking at more launches in the National Capital Region and other parts of the country in the next three months.

Prestige and Sobha, the South-based companies, are confident to achieve targets by the financial year-end.

JC Sharma, managing director, Sobha, said, “We could not launch any of the planned 1.7 msf in the third quarter due to delay in approvals. We are confident of completing these launches in the fourth quarter as by the approvals have started coming in.”

Venkat Narayana, CFO, Prestige Group, said a significant part of the planned launches was in a 4.5 msf residential project in Chennai. “We will launch this project in this quarter and are confident we of achieving our yearly target of around 10- 12 msf, out of which 6-7 msf was launched in the first half.” The official said launches in the third quarter were marginal at 0.5 msf.

Godrej Properties officials said the company did not share future guidance and the launch target of 8.6-9.6 msf was incorrect.
However, according to a recent property report by research firm Jefferies India, Godrej Properties has given a launch guidance of 8.6-9.6 msf for the second half.

A top official from HDIL could not be reached for immediate comment. A spokesperson for Oberoi Realty refused to comment, citing silent period before quarterly results.

In comparison, the realtors fared better in the first half of the ongoing fiscal. A total of 11.9 msf was launched by the companies except Oberoi, which did not launch properties then as well. The six companies sold 10.1 msf in the first six months of the fiscal.