Bengaluru-based real estate company Prestige Estates reported muted sales in the June quarter signalling that even a relatively resilient market may be seeing some pressure. “After showing strong resilience during the past 2 years of broader weakness, Bengaluru real estate market has started showing deterioration at last, as reflected by the sales trend. The massive slippage Prestige has delivered highlights the magnitude of market weakness,” a brokerage report stated in its post result analysis.
Prestige’s sales were subdued at 0.8 million sq ft versus 1.5 million sq ft in the March quarter. The lower sales were mainly led by lower number of unit launches during the quarter.
According to one analyst report, the company management reiterated that it will focus more on completing ongoing projects than launching new ones that will drive sales momentum. Since last year, several companies have followed a similar strategy owing to a build up of unsold inventory in the sector.
Part of the issue with new launches has to be attributed to a slowdown in granting requisite permissions in Bengaluru, said some industry experts. Still, analysts are worried that Prestige might struggle to sell its existing inventory as many of these apartments command premium pricing. Last year, Prestige was prolific with its launches and its products were optimally priced in the range of R60 lakhs – R70 lakhs, which typically finds favor among salaried IT professionals who comprise bulk of the housing demand in Bengaluru.
But as the life cycle of projects grow, so does the price of apartments. Whether Prestige will find buyers for its upper tiers, costing around R1 crore a piece, at a time when the general market sentiment is low remains to be seen. Last year, the company had missed its guidance. And this year, sales during the first quarter have been flat. Sector analysts are concerned the company might not be able to achieve the 20% growth in sales it earlier guided for.