Sales of Godrej Properties fell to a 10-quarter low in Q1FY17 prompting analysts to question whether the sales recovery that has been expected will come about, especially in Mumbai. After achieving record sales of almost 5 million sq ft in the past financial year, Godrej Properties reported muted sales of just 0.7 million sq ft during the April to June period.
“I think the market as a whole continues to be subdued and that is probably true across cities,” said Pirojsha Godrej, managing director and CEO of Godrej Properties. But that does not mean good projects in the right locations from well regarded developers are struggling, he asserted. Last year, during the festive season, Godrej’s project, Trees was among the handful of residential projects that had a successful enough launch, selling 80% of its first phase launch within a week. One analyst report pointed out Godrej has always benefited, given its brand recall. Still, analysts expressed concern that the company might not be able to keep up with the run rate it achieved in the previous financial year.
In FY16, the company had achieved Rs 5,000 crore of sales (Rs 3,500 crore from residential and the remaining from commercial projects), mainly on the back of launches in areas like Chembur and Vikroli in Mumbai. This year, according to the company’s plans, launches are lined up in markets like Noida and Greater Noida, the markets that are widely considered as laggards, which are dragging overall residential sales. The value of apartments in these areas would easily be a third of what a sale can fetch in Mumbai.
Accordingly, Godrej assured that price points in these markets are at an inflection point and volumes, not value will drive momentum. Still, sector specialists said launches in Thane will be critical for the company to maintain its sales velocity of last year.
Not surprising as a latest report published by consulting firm, Knight Frank India stated new launches between January and June declined to a three-year low, led by the NCR micro-market.