Buoyed by good sales, real estate developer Prestige Group plans to launch 8-9 million sq ft of projects during the second half this fiscal. The company has launched about six million sq ft of projects so far.

Despite rising home loan rates, “the response to our new launches has been good. While we saw sales of Rs 1,300 crore for 2010-11, currently our sales stands at Rs 947 crore this year,” Mr Venkat K. Narayana, Chief Financial Officer, Prestige Group, told Business Line.

“We are seeing volumes in residential sales because prices are affordable,” he said, adding that the company would launch about 12 million sq ft of residential projects this year. The company’s current average realisation is between Rs 3,500 and Rs 4,000 per sq ft, and Mr Narayana said developers are not likely to bring down prices. “Developers have no room to cut prices, as the pricing is cost-based.”

According to him, the company would spend about Rs 1,250 crore on ongoing projects this year. While about 80 per cent of the residential launches would be funded through sale proceeds, for other developments a combination of debt and internal accruals would be used. The company’s debt-equity ratio stands at 0.5. Except for capex projects (SEZ, malls and hotels), “which would be funded by debt, we might not be raising funds,” said Mr Narayana.

Prestige Group is targeting an annualised rental income of Rs 500 crore from its commercial and retail developments by 2014-15, to reduce its dependence on external funding. “If we complete our ongoing projects, we should be there,” he said. Last fiscal, the company’s annualised rental income stood at Rs 150 crore. It raised about Rs 1,200 crore through an IPO last fiscal, and has Rs 300 crore available from that, Mr Narayana said.

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