The year gone by was pretty bad for the real estate sector. Bloomberg TV India caught up with Sobha Developers Vice-Chairman and Managing Director JC Sharma to discuss the prospects in 2016.
You are looking to build a new housing project in Gurgaon worth about ₹1,000 crore. What is the timeline for that?
The launch is expected any time this month. It is a 40 acre development with 2,000-plus apartments in one of the finest locations in Delhi-NCR.
This year we have not been able to book income from some projects like Sobha Dream Acres and Clovelly and other projects. Where 35 per cent of the construction cost was not incurred, our revenue realisation was low. At the same time, as far as construction activity is concerned, this year may not be as good as what we had achieved in the last year, which was the record year with an about ₹800 crore topline. So we had some reduction in our contracting income and because of the income recognition practices we follow we will have some loss of income in the revenue. But operationally, we will be doing more square feet this year than last year. The second half should be better. The highest realisation has been in Delhi-NCR as well as Kochi. Do you see a greater push in those areas?
Yes, you are right. With this vast 40 acre launch in Delhi-NCR, we are deepening our presence where average realisations will definitely come down. Currently, what we are selling are villas and row houses, which come at relatively higher prices. With the launch of this apartment, average realisation will come down but overall numbers will increase. Similarly, we have invested lots of money in acquiring the land rights in Kochi and Pune, where we believe that going forward our realisation and volumes will be better. Our idea has been that while we keep our dominant position in Bengaluru, we also should deepen our presence in other cities like NCR, Pune, Chennai and Kochi. And strategically, we are moving toward that direction and hopefully 2016 will reflect the benefit of this strategy.
How did the Chennai floods affected your revenues?
This started only in the beginning of December. It will be too premature to define it as a trend when something happens once in a century. Once the aftermath of this flood is taken care of, we believe the real estate market will bounce back.