Mid-income housing (Rs 70 lakh-Rs 1.5 crore) has become popular with some developers. One of the behavioural changes emerging out of Covid-19 is the growing demand for more evolved personal living spaces. Gurgaon-based developer DLF is also increasingly eyeing this segment. Group CFO Vivek Anand tells Rishi Ranjan Kala that historically low-interest rates, coupled with […]
DLF achieved 93 percentile overall score in governance, environment and social dimension
Mid-income housing (Rs 70 lakh-Rs 1.5 crore) has become popular with some developers. One of the behavioural changes emerging out of Covid-19 is the growing demand for more evolved personal living spaces. Gurgaon-based developer DLF is also increasingly eyeing this segment.
Group CFO Vivek Anand tells Rishi Ranjan Kala that historically low-interest rates, coupled with affordable price points and at some places reduced stamp duty charges, is offering buyers a compelling option to purchase their dream home. Edited excerpts:
How does DLF see the real estate scenario developing in the next 6-12 months? In the last six months, businesses and consumer sentiments have been impacted adversely. Businesses, around the globe, have adjusted and realigned their strategy and operations to these changing times. There has been a gradual recovery in the real estate sector. We believe the demand for real estate is strong during the pandemic as consumers see immense security in this asset class. Some of the factors in favour of the sector are historic low mortgage rates, attractive product pricing and payment plans.
Is DLF witnessing a revival in enquiries and bookings? We have seen an increase in enquiries from prospective buyers. An interesting insight is that the time taken by a consumer for searching for a property and closing the deal has reduced drastically, the conversion rates have improved. This is because there are serious buyers in the market who are familiarising themselves with the product before they close the deal. Fortunately, we are in a position to offer ready to occupy homes with all operational amenities which allows the customer instant ownership of a home. We have witnessed a revival in sales. Q2 has been encouraging, and we expect further improvement over the next two quarters.
DLF is increasing focus on mid-income residential housing. What are the reasons behind such a shift? Yes, we are looking at the mid-income segment as a major growth driver for the company. One of the reasons for the shift is the robust demand and better cash conversion. Today, the consumers are looking to own a home for security and community living. There is a large segment of young homebuyers who would like to take advantage of low home loan interest rates, along with affordable price points and at some places reduced stamp duty charges. These elements are presently at an all-time low and are expected to trigger positive consumer sentiment. We believe that this segment will ensure sustainable growth and also create long term value for our customers and stakeholders.
How does DLF anticipate the office space rentals business to unfold in the next 6-12 months? Our expansion plans are on track. Earlier this year, we had announced the launch of the first phase of two marquee projects, Downtown in Chennai and Gurugram. The construction of both these projects remains on track. We will be adding 4 million square feet of new office space.
The office business continues to demonstrate resilience. In the large metros, the vacancy levels continue to be low with no significant supply of new space. The recently concluded REITs and large ticket leasing deals vindicate the strong prospects of the office business.
How do you see revival in the retail segment? Covid-19 affected retail operations in malls across the country. We realised this and decided to handhold our tenants and stakeholders by offering them staggered rental waivers. All our malls are reporting an improvement in footfalls and festive shoppers are out shopping. The brands are seeing a revival in their sales and, footfalls have reached 50% of pre-Covidd levels. Now that the government has directed that cinemas can open with 50% capacity, we expect footfalls to increase gradually. These are encouraging signs, and gradual revival is expected.
A large section of analysts have been predicting consolidation in the sector and the future is good for large, branded players? Do you agree? Yes, I believe that larger players stand to benefit because of their strong balance sheet, brand image, their credible track record of delivery and lineage. Smaller players who had over-leveraged their balance sheets will continue to remain strapped for funds. This may result in further delays. There is bound to be consolidation in the sector, and larger players will gain market share at their cost. Currently, we are not looking at the acquisition of stressed projects. We are focussing on creating a robust pipeline of new products to leverage this opportunity