Builders brace for competition as sector builds brick by brick

Written by Mona Mehta | Mumbai | Updated: Nov 13 2009, 05:35am hrs
The competition has started becoming intense in the real estate market with top builders witnessing actual sales conversion of residential apartments in the metro cities during the first seven months of the current financial year. Enthused by the response, builders are charting fresh strategies to increase the number of residential projects.

Abhisheck Lodha, director, Lodha Group, told FE, We have sold 4,500 units of residential apartments (around 50 lakh sqft) during the past seven months. During the third and fourth quarters, we hope to sell an additional 5,500 units. Prices, at present, are such that buyers find it attractive. People have buying power and the real buyer is coming to the market.

According to Lodha, "There are about 38 ongoing projects spread across 29.9 million sqft. In the next five years, about 66 million sqft will be used to build 18-20 new projects. In order to fund the existing and new ventures, we are raising about Rs 2,800 crore in the next three to four months through an IPO."

Amid revival in the real estate market, the demand for projects launched by top builders has been much stronger compared to the peak witnessed in 2007. According to industry experts, 30% of the demand is for residential projects in the price bracket of Rs 5-15 lakh, 26% is between Rs 15 and Rs 25 lakh and 22% is in the range of Rs 25-40 lakh. Around 12% buyers opt for apartments priced between Rs 35 and Rs 50 lakh, while a mere 6% is ready to pay over Rs 50 lakh.

Harinder Dhillon, vice-president-marketing, Raheja Developers, said: We have sold 316 apartments in Q1 and Q2 of the financial year 2009-10. This was largely because of the launch of just one new relatively small-size project plus finishing sales of older projects, which we have had in the first half of 2009-10. The second half will witness at least four project launches and we expect to sell 1,500 apartments in Delhi and the NCR itself in this period. We have so far not ventured into Chandigarh, so all figures are for Delhi and Gurgaon. Prices have not really softened. A rise in property prices in being witnessed in Gurgaon because of a revival in the market sentiment.