DLF to relook biz model for housing segment

By: | Published: August 30, 2016 6:44 PM

DLF will have a relook at its business model for housing segment after the rules under the new real estate regulatory law are notified and the realty major may start selling flats only after construction reaches a certain stage.

Housing sales remained sluggish but the commercial segment continued to perform strongly, he added. DLF said it would complete construction of almost all old and legacy projects this fiscal and is unlikely to launch any new projects in next few quarters. (Reuters)Housing sales remained sluggish but the commercial segment continued to perform strongly, he added. DLF said it would complete construction of almost all old and legacy projects this fiscal and is unlikely to launch any new projects in next few quarters. (Reuters)

DLF will have a relook at its business model for housing segment after the rules under the new real estate regulatory law are notified and the realty major may start selling flats only after construction reaches a certain stage.

DLF’s net debt rose by Rs 285 crore during the first quarter of the current fiscal to Rs 22,487 crore. In a conference call with analysts, DLF’s Chief Financial Officer (CFO) Ashok Tyagi said the company would achieve the target of Rs 3,000-3,500 crore for gross sales bookings this fiscal despite slow sales in the April-June quarter.

Housing sales remained sluggish but the commercial segment continued to perform strongly, he added. DLF said it would complete construction of almost all old and legacy projects this fiscal and is unlikely to launch any new projects in next few quarters.

“The company is also waiting to see the final rules under RERA to see how it can tweak its business model. We will have to see if we should run our residential business like our commercial business where we construct before we sell,” DLF’s Senior Executive Director (Finance) Saurabh Chawla said.

Real Estate (Regulation and Development) Act, 2016 was passed by the Parliament in March and the law came into force from May 1. The law seeks to protect consumers from fly-by- night operators.

This law seeks to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of properties in an efficient and transparent manner and protect the interest of consumers in the real estate sector.

All real estate projects have to be registered with the real estate regulatory authorities. On GST, Tyagi said the tax burden would rise by about 6 per cent if GST rates are fixed at 18 per cent. Meanwhile, DLF said in an analyst presentation that its gross sales booking stood at Rs 470 crore in the first quarter of this fiscal. “Cancellation in legacy projects Rs 265 crore resulting in overall net sales booking of Rs 205 crore.”

The company has completed project having 3.63 million sq ft area and suspended work on about 1 million sq ft. The project under construction stood at 26 million sq ft.

In the rental business, the gross leasing stood at 0.86 million sq ft renewed at higher rate than budgeted rates and lease expiry of 0.91 million sq ft.
“Leasing offtake also being affected by virtually Nil inventory in most of the places,” DLF said, adding that the focus is to aggregate terminations and release at a higher value to ‘high value, high creditworthy’ large customers. The project under construction stood at 1.7 million sq ft.

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