Focus is on Mumbai, Pune markets; construction labourers' strength back to optimum level: Mahindra Lifespaces

The realty space has been buzzing and Mahindra Lifespaces stock is up 105 percent this year. CNBC-TV18 spoke to Arvind Subramanian, MD & CEO of the company, to understand the demand trends and outlook for the realty space.

Talking about demand trend, Subramanian said they lost about six weeks of the first quarter due to the lockdown and while the lockdown was quite localised in the second wave compared to what it was in the first wave, it did have a pretty significant impact in terms of sales as well as construction activity.

“However, the good news is that like we saw last year from September onwards, we saw a pretty sharp rebound activity in real estate. We have seen the same since the lockdown started getting eased from mid-May or so. We have seen a sharp rise in sales, enquiries, sales conversions, and the construction labour is back at January-February strength. So, we are kind of going ahead full throttle,” he added.

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Subramanian said the company had to defer some of the launches that were planned for the first quarter and the Chennai project was launched just about 10 days back and has got a good reception. It's an affordable housing project in Mahindra World City, Chennai. It is good to see demand coming back, he added.

When asked if the company would look at price rises on the back of an increase in input costs, Subramanian said, “We have a discipline of doing price rises every quarter or so and do not do dramatic price rises, but we do increase prices across our portfolio by anywhere between 1-1.5 percent, irrespective of the input cost inflation.”

“Given the increased inflation on steel, cement, plastics, copper, almost every commodity is going through record highs at their pricing levels, we do anticipate that these price rises will need to be a little bit higher, going forward, from 1-1.5 percent to maybe 2 percent per quarter, to absorb some of these cost escalations,” he further added.

However, the prices rises would be done in a measured manner, he said, adding that the newer projects where they are early in the construction cycle and therefore have a lot of spends left from that perspective will need to absorb a lot more cost inflation, versus projects where a lot of hard work is completed.

On affordable and mid-segment housing, he said, “We have gone through a journey we have learnt a lot about affordable housing and mid-segment housing. So, we want to stick to those two segments and stick to the cities of Mumbai and Pune where again, we understand the consumer better, we understand approval processes better and, therefore, are able to get off the blocks much quicker.”

“For the next three years, you will see us being far more focused rather than spread ourselves thin we want to be in Mumbai and Pune and in these two segments, roughly ticket sizes ranging from nearly Rs 30 lakhs to Rs 3 crore is the segments that we will operate in,“ he added.