‘GPL expects ‘inevitable’ price hike to improve developers’ margins’

The margins for developers were under pressure as prices of properties were low and commodity prices were going up. That’s why price hikes are quite inevitable now, and following a price hike the margins would also improve.

Apart from not getting input credit on GST, these norms are actually providing a transparency and fillip to the sector.

Godrej Properties (GPL), a part of the Godrej Group, is witnessing a rebound in business on a surge in demand for properties. The real estate major expects the “inevitable” price hike to improve developers’ margins, which were under pressure for some time now. In an interview with Rajesh Kurup, GPL MD & CEO Mohit Malhotra said that the firm is evaluating all opportunities as consolidation is gaining ground. Edited excerpts:

GPL posted a five-fold jump in second quarter net profit. Are you seeing a rebound in business?

We are seeing a strong uptick in demand as affordability is at an all-time high. Yes, there is a rebound in business. I think the overall trend for the next few years is definitely positive.

On your launch pipeline and inventory position? Has the labour shortage due to workers migrating back to their homes sorted out?

The launch pipeline is pretty good. We have already done two launches in Q3, and we have a launch pipeline of a total of 5.95 million sq ft for FY22. Everything is on track, and we should have a strong Q4 also. On the inventory front, we are at historical lows now because of our strong sustained sales. We faced some labour shortages at the end Q1 this year but these issues are now fully sorted out.

At the peak of the pandemic, GPL ventured into online sales of real estate. How did it fare?

The online sales were a momentary thing. Right now, it is a hybrid process with some part of the sales happening online and the rest offline. Now most of it happens online and people visit the property to handover the final cheque.


Are you planning to concentrate on the ultra luxury segment and enter into further joint ventures like the one signed with TDI Group?We are concentrating on all segments; we would like to do mid-income, premium and a few ultra-luxury projects. We are looking at similar opportunities like the one with TDI and we are keen to invest more and do more projects.

Your focus continues to be the four major cities?

Yes, we would concentrate across these four cities — Delhi-National Capital Region, Mumbai Metropolitan Region, Pune and Bengaluru — while we are observing the trends in other cities, but haven’t taken a call yet.

The developers’ margins were under pressure for quite some time now. Is the price hike the remedy?

The margins for developers were under pressure as prices of properties were low and commodity prices were going up. That’s why price hikes are quite inevitable now, and following a price hike the margins would also improve. The prices are now slowly starting to move up. We are seeing some minor price hikes across metros, and this will slowly penetrate into other markets too.

Didn’t the regulatory overhauls across RERA, NBFC and GST give a boost to the sector?

Yeah, I consider these as positive moves as they have helped consolidate the sector, made it more professional and customer-centric. I think these are all positive steps and would help the sector in the long run. Apart from not getting input credit on GST, these norms are actually providing a transparency and fillip to the sector.

With consolidation happening in the sector, there would be a lot of opportunities for takeovers as companies go belly-up. Are you scouting for such takeovers or buying land parcels?

We are open and are evaluating all opportunities. We have done some large acquisitions in the past and intend to continue doing big buys. A lot of consolidation is going on in the industry and we’re actively looking at opportunities on the land side.

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