We have sold 50% of Mumbai inventory: Puravankara CEO Abhishek Kapoor

We are looking at launching about 16 million sq ft in the market and in the first phase, we will typically launch about six million

Bengaluru-based property developer Puravankara is looking to roll out new projects in Bengaluru, Mumbai and other cities. Abhishek Kapoor, executive director (ED) and chief executive officer (CEO), discusses the impact of rising interest rates and slowdown in the IT sector on the property market, in an interview with Raghavendra Kamath.

What kind of growth are you expecting in sales booking value in FY23?

We are looking at launching about 16 million sq. ft (of residential property) in the market. And in the first phase, we will typically launch about six million sq. ft. Normally, we generally sell between 40 and 50 per cent in the first 12 months from launch day. Our sustenance business is already performing like the last quarter, which was over Rs 500 crore on a quarterly basis. But that’s a broad point and we would not like to give forward-looking guidance.

What are your plans for residential and commercial properties in FY23?

By the end of the financial year, we are looking to launch 16 million sq. ft. Of this, Puravankara will account for six million sq. ft, Provident another six million sq. ft and Purva Land four million sq. ft. We have set ourselves up to deliver around 3,000 homes this year. There is a lot of delivery planned this year, with three million sq. ft being the minimum target we have set. On the commercial front as well, we have announced close to 3 million sq. ft in Bengaluru. And, we are excited about the launches as we see them as part of the commercial strategy. We are targeting one million sq. ft by the end of 2024.

What kind of growth do you expect in the festive season?

We have a strong pipeline of launches to cater to the demand. We have introduced several measures to encourage new customers to enter the market. For instance, we will offer a reduced home loan rate of 3.99 per cent and a 2-5 per cent rebate on prices for a limited period.

How are your Mumbai properties doing in terms of sales? How much inventory have you sold in this financial year in Mumbai?

With regard to Mumbai properties, we have sold over 50 per cent of the launch inventory from last year to this year. We are seeing continued traction in Mumbai properties. We are planning a new launch in Goregaon in the next quarter.

Have you increased prices in FY23? If yes, by how much and do you plan to increase rates in the coming months?

Due to inflationary pressure, prices have increased in the first two quarters already. From launch to completion, generally, any project will see an appreciation of between 50 and 60 per cent of the launch price. That trajectory will continue because, as the project gets completed, customers see visibility of delivery. Therefore, the prices appreciated. We know that there is no ready-to-move-in inventory and that there is a demand-supply gap. I think new launches are trying to bridge it. Owing to consolidation among developers, there aren't enough launches that will come to bridge the demand-supply gap. Therefore, we will see continued appreciation in prices.

When interest rates are going up and the IT sector is going through a slowdown, do you expect headwinds for the residential sector after the festive season?

Firstly, the real estate absorption of commercial IT space has gone up, which indicates that there is no slowdown. Rentals in the residential segment in Bengaluru market have gone up as people have returned to the city post Covid. We have not seen any let down in demand as far as the IT sector is concerned. Secondly, with the overall economic performance, and investment from the government, there is general buoyancy in demand, especially in many Southern markets.

What kind of impact do you expect from the IT slowdown on commercial leasing and rents?

As far as Bengaluru is concerned, we are expecting a total leasing of almost 12 to 14 million sq. ft, which is more than the pre-Covid period. Across the country, we are expecting almost 55 million sq. ft of leasing this year, which is almost similar to pre-Covid figures. Hence, we expect leasing activity and rentals to go up. In fact, rentals of almost all Grade-A buildings have gone up.