After Bengaluru real estate market setback, Sobha Ltd plans comeback; here’s how

Source : Financial Express, July 20, 2016

Although the real estate market has seen some improvement in sentiment this year, Bengaluru-based property developer Sobha Limited has reported a subdued first quarter. J C Sharma, vice chairman and managing director, Sobha Limited tells Mahesh Kulkarni that the company is all set launch some big projects to get back the momentum. Excerpts:

Sobha’s total performance has taken a hit on all fronts during the first quarter including its home market Bengaluru? What are the reasons?

There was no blockbuster launch in Q1, which hit our sales. In Bengaluru market, we sold 700,483 sq ft, whereas during the current year, our sales came down to 606,633 sq ft in the city. However, during the Q1 this year, there has been no major launch in Bengaluru or across the country. We have been selling old products. If you take out that aberration, we have done better in all other cities. Most importantly we launched our new project Sobha City in Gurgaon on June 29. This is a 40 acre township and our Gurgaon performance has been significantly better compared to the last three years there. In Chennai, post flooding again we have seen improvement and uptick in sales. We launched Winchester officially in Chennai on July 3 and are seeing uptick there. Thrissur has done well. Other markets are stable.

After Bengaluru real estate market setback, Sobha Ltd plans comeback; here’s how

Your compact luxury housing brand Dream Acres is witnessing lack of demand in Q1 this year?

During the first quarter of last financial year, we had formally launched Dream Acres brand in Bengaluru, which helped us to perform exceptionally well in the quarter. Dream Acres continues to do well for us in a single location. It will contribute highest sales in terms of sq ft area. This product is only six quarters old. It happens with any product, whether it is a car, a movie or real estate. In such a short span of time, we have seen sale of R1,000 crore in value terms and sold two million sq ft in area. It is not sold to investors, but to the real users, who will occupy. We are also looking to take the brand to Chennai, Pune and NCR for expansion. In Chennai we have land, but we are looking for land in Pune and NCR. We need to have at least 50 acres of land parcel in each of these cities to launch the  project.

What is the extent of land parcel held by the company?

Currently, we have about 2,400 acres of land in various cities, of which 30% is in Bengaluru. We are looking for more land in multiple locations for expansion.

What are the growth prospects of Sobha in the current fiscal?

If you look at volume perspective, we improved our volume from 3.28 million sq ft in 2014-15 to 3.38 million sq ft in 2015-16. During the first quarter of this year, we have done relatively less sales at 809,000 sq ft compared to the previous year’s 841,399 sq ft. Despite this, we have lined up new launches this year. In Gurgaon we launched a new project in Q1. We had a new launch in Chennai in the first week of July. We will have a big launch in Kochi during the second quarter and in Bengaluru during the third and fourth quarters.

A series of events are influencing buying decisions. We expect the implementation of 7th Pay Commission recommendations will help a lot of government employees, and later public sector employees to invest in real estate. This year, the Monsoon is good, inflation is stable, home loan rates are down to 9.3%, office space absorption is better. Overall, the market is improving from its bad scenario.

What is the new addition to your inventory in FY17?

In Gurgaon, we have launched a new project which will have 3.24 million sq ft. In Chennai, we will add 450,000 sq ft and 3.3 million sq ft in Kochi and another 500,000 sq ft will be added in Bengaluru this year. Overall, we will have at least 7 million sq ft of new inventory being added this year. We expect about Rs 2,000 crore worth of sales during the current fiscal.

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3 thoughts on “After Bengaluru real estate market setback, Sobha Ltd plans comeback; here’s how

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