The incentives rolled out for the real-estate sector to tide over the impact of Covid-19 coupled with low housing-loan interest rates, has helped demand recovery for real estate players.

The comeback is strong particularly in the residential segment. Pavitra Shankar, Executive Director, Brigade Enterprises, in an exclusive interview with BusinessLine shares her views

Could you take me through the impact of Covid-19 on Brigade and how it overcame the challenges?

From March when the lockdown started and until it was lifted, we had been pretty much in a situation where we had zero site visits. Though we managed to do some amount of business, almost the entire June quarter (Q1) went without customers coming to the sites. And, I would say that we were not very optimistic and we had maintained that it would take at least a year or more.

In Q1 we saw 60 per cent (y-o-y) drop in our business, but we had a very good September quarter and even better Q3 (December quarter). I think we can all safely say the market has come back fast. And it’s come back in an unequal way. That is, developers with under-construction properties or new launches, unless they are established players are unable to monetise on their projects and unfortunately many of them had to come out of the business.

As a result, whatever demand was in the market started coming to the established players.

Developers with finished inventories don’t see much problem in terms of sales. Where does Brigade stand in this regard? How is your portfolio in terms of on-going and completed projects?

Typically, we used to see a distribution of one-third in each segment- completed, new launch and under construction projects. I would say in the first quarter or so, after the lockdown, we saw a lot of shift towards completed inventory. This is also because we didn’t really launch anything in the first quarter. The luxury segment too did well for us as a lot of our luxury inventory is completed. So, I think it was more of a move towards completed inventory and also for us, the luxury inventory is slightly larger. And I think that the demand for luxury properties could also be Covid effect. People just wanted to have a larger space for themselves,with better outdoor spaces and amenities and things like that.

But we did launch products in Q2 and Q3 (FY21) and they ended up taking a larger proportion of our portfolio, which I think is a good thing. While there is still demand for completed inventory,it’s good to see that customers do have the confidence to go for new launches or under construction where they won’t get possession for the next two to four years. We had launched our Brigade residences at World Trade Centre, Chennai, at the beginning of 2020 and the each of those units are worth about ₹2 crore . So, it’s not super luxury, but it’s definitely at the high end of the spectrum. And that has also done well. But that I feel it is specifically because of the location of the project also too - it’s on OMR and right before the toll road.

So, how much of your portfolio is in mid-income housing category?

The way we define mid-income, the ticket size will be ₹50 lakh-1.5 crore because you are talking about double-income households in some market like Whitefiled where ₹1.5 crore is pretty much mid-income. So, about 80 to 90 per cent of our portfolio will be in the mid-income segment and 5 per cent in the luxury segment.

Are you expecting prices to go up in the future?

We see it across some of our projects. Not all projects but some, yes. Wherever possible, there is a price increase. We will be looking at types of inventory that moves faster and for those, we should be increasing the prices. We’ve driven around a 3 per cent price increase since the end of lockdown. I think over the coming few quarters, we’ll be aiming for the same.

Given the impact witnessed in office and hotel segments, do you see any reduction in your capex spends here?

In the current situations the capex that we had kept aside for hospitality is on hold. We had one new hotel to start building, which we are going to keep on hold until we see some kind of improvement in the sector. But that maybe around ₹75-80 crores capex. In terms of our commercial segment capex, we are still going ahead because we still feel confident that there is good appetite for office space. Though it may take some time to lease, in the end, we don’t think the leasing is just going to go away completely. Both the projects - Brigade Tech Gardens (Bangalore) and World Trade Centre (Chennai) - have actually seen very good absorption.

comment COMMENT NOW