Good response for quality projects gives us confidence to deploy more capital, take big bets, says Godrej Properties

Godrej Properties has added 4 new residential projects to its development portfolio, one in Bengaluru and three in the Mumbai region. Mohit Malhotra, MD & CEO of the company said besides these four projects in the current financial year, they have a good pipeline of launches at advanced stages of approval.

“The returns are looking very good in this segment given the stress in the market today. So, the quality of deals which we are getting, the kind of returns we are getting are very superior if you compare to the past,” he told CNBC-TV18.

Talking about demand in residential projects, he said, “We are very bullish about the demand and the overall environment. For quality players, there is a lot of demand. The customers are looking at housing and demand is gravitating towards the high quality players. So, wherever we have the new launches, we have seen excellent response from our customers."

He further added, "Because we are selling well, it gives us confidence to deploy more capital in the market and take larger bets. You would have seen the way we are adding projects in Mumbai and the rest of the country. It shows the confidence which we have in our brand, in our abilities.”

When asked about stressed out projects, Malhotra said, “We have not yet done any transaction where we have looked at a brownfield project. Right now our focus is to acquire new lands which are  pure green field land projects." Having said that, if there is a brownfield project within a large portfolio, we might evaluate it but as of now whatever projects we have added have been pure land deals, he added.

Throwing more light on land purchases and acquisitions, he said, “Our balance sheet, ending September, we were sitting on Rs 3,000 crore of cash and we have a kitty of around Rs 5,000-6,000 crore which we intend to deploy in residential real estate space over the next 2-3 years.”

“Given the strength of our brand, connect with the consumer which is reflected in our strong sales gives us a lot of confidence to take these strategic bets," he said adding that in all fairness, the land valuations too have come down significantly. Therefore it is a great time to invest capital and take some big bets in the residential market.

“Land prices has come down across geographies in India. In some geographies like NCR, we have seen prices down from almost 50 percent. In some of the other geographies prices might have come down by lesser percentages but we see that the asset prices have come down."

Moreover, given the NBFC crisis, the liquidity crisis that the residential real estate space is facing and some of the issues that some developers are facing, it’s an interesting time to acquire properties at a good discount from the market prices, he said.

He specified that in this kind of scenario, home price have flattened but have not come down. However, when the prices are expected to go up would be difficult to fathom because that depends on the larger real estate cycle, macro environment in the country. "I feel that we have seen the bottom of the prices. If you look at affordability today, it is at all-time high. The only risk, which I see today is the overall macro-economy. If that risk is resolved, prices can actually start inching up from here.”