Analysts are bullish on the Oberoi Realty stock, given the strong sales growth in Mumbai. The company has got a lot of traction in its uber luxury project Three Sixty West in Mumbai. Vikas Oberoi, chairman and managing director, talks about the company’s plans and his outlook for the sector in an interview with Raghavendra Kamath.
What’s your outlook on 2023 sales? Do you expect headwinds if rates go up further?
The real estate industry in India has retained its position and demonstrated enough resilience. The economy went through uncertainty as a result of a pandemic-driven course correction. We believe Indian real estate will remain positive and the current interest rates are not an uncharted territory for India unlike the western markets. The market will expand in FY23 thanks to a strong foundation, rising demand and positive capital investment cycle.
Also, the combination of economic resilience, return to pre-pandemic working conditions and various government efforts towards formalisation of the economy are positive drivers for the real estate market’s success in the years to come.
Can you share your launch plans for the rest of FY23?
We are launching a new tower at Sky City, our Borivali project. With the new tower launch, Sky City will continue to deliver aesthetically-designed expansive homes to buyers in the western suburbs of Mumbai. We have two projects in the pipeline towards central suburbs in Thane and Pokhran. In Thane, we have our show apartment ready and we are actively finalising the design and concept for Kolshet. We intend to launch Kolshet in this financial year.
Have you made any progress on your redevelopment project plans?
As far as business development goes, we are very committed to aggressively pursuing opportunities irrespective of their nature, be it redevelopment or acquisition of new land parcels. We continue to do our due diligence and feasibility study on a few redevelopment projects, while in some others, we have been awarded the contract as the preferred developer. We will discuss those once we have finalised the deals.
We have embarked on a Slum Rehabilitation Authority (SRA) redevelopment project close to Sky City, Borivali. SRA has seen us as a valued partner and 95% of the site is now cleared. Moving forward, the redevelopment will play a significant role in our overall strategy in the MMR region and beyond.
Have you been able to make any progress on your NCR and Bengaluru entry plans?
The residential real estate market in NCR is witnessing positive trends on the demand side. The exceptional quantity of transformational changes brought about by Covid-19 presented both major problems and opportunities.
Opportunities in NCR remain of interest for us as currently there a is huge trust deficit and few reputed big developers, and there are plenty of buyers and land options.
How are you placed on your plans to buy back the partner stake in Three Sixty West?
We have issued a detailed note to stock exchanges outlining the details of the deal for all our stakeholders.
What is your sales target for Three Sixty West in the next three years?
Three Sixty West is one of our most ambitious projects and it has received a tremendous response from the market. The inventory is ready and available with an occupation certificate in place and we are extremely optimistic about the sales and expect strong sales traction in the next 3 years. There’s already a lot of interest generated due to word-of-mouth publicity. We remain very positive on future sales as well as pricing.
Office developers say RFPs for office properties are on hold due to the US recession and Fed hikes. What has been your experience?
On the contrary, we believe India stands to gain from this slowdown. It will bring more jobs to India as costs are lower and they are actively seeking cost-efficient opportunities. We are seeing incremental FDI investments in the commercial segment, including offices, industrial and warehousing segments. The first two quarters of FY23 have seen a significant leasing activity and we expect this sector to hold steady as office occupancy continues to go back to pre-pandemic levels.
How are the land prices behaving of late?
Land prices have been stable, there has not been any noticeable change in the prices even as more and more development is happening across the country. It has been observed that there are not many contenders for land with ability to write big ticket size cheques and, hence land prices remain largely stable. However, we have witnessed a rise in prices in the residential segment, across all major cities, due to the increase in input costs of raw materials and manpower.
While this rise is bound to translate into a price hike for customers, we believe that despite the hikes, the homebuyer sentiment is very positive.