The developer has claimed sales figures in the third quarter of this fiscal which are almost equal to the sales figures of entire Hyderabad city for the same period
Real-estate developer Lodha Group claims to have sold approximately 4,000 units in the third quarter of FY10 according to industry analysts. Ironically, the sale reported by the developer is equal to the figure reported by entire Hyderabad city in this quarter.
Lodha’s numbers have been questioned by industry experts. Earlier in 2007, the group launched a luxurious residential complex named ‘Lodha Aqua’ at Dahisar in suburban Mumbai.
The developer claimed that on the very first day of the project launch, it sold 300 units at Rs5,850 per sq ft (comprising two bedroom, hall & kitchen (BHK), with an area of 1,017 sq ft and 3BHK with an area of 1,395 sq ft). In December 2009, the group jacked up the price for the project to Rs6,399 per sq ft. However, in 2010, the developer is aggressively advertising the same project as a fresh one.
If the developer has already sold 300 units on the first day of the launch three years back, why is the company spending so much on advertising? The group is busy coming out with full-page advertisements and is booking prime advertising time on various channels to promote the project. Moneylife sent an email to the company on the issue. However, it remained unanswered until Monday evening.
During the third quarter to end-December, the real-estate industry has reported sluggish sales in Mumbai. In Mumbai and Delhi, the major real-estate markets in the country, there has been very little movement during the quarter. “Rents in the NCR further depreciated to reach their lowest level in the past two years, which also provided an impetus for corporates to lock in leases at existing rents,” said Jones Lang LaSalle Meghraj in a report.
Despite the quarter falling in the festival period, Mumbai reported lower sales as developers spiked prices. The increased property prices made actual end-users withdraw from the market. According to an industry expert, during the third quarter, property sales in Mumbai fell by around 20% compared with the previous quarter.
Most of the real-estate companies that faced a severe liquidity crunch in September 2008 have raised funds and de-leveraged their balance sheets. A spate of events since January 2009, starting with an RBI debt-restructuring package for real-estate companies, asset sales and fund-raising from capital markets have alleviated the liquidity concerns for the sector.
“Amid a slow revival in the residential segment and a nascent commercial space recovery, we are underweight on the real-estate sector over the medium term. Though liquidity has improved for real-estate players, growth and valuations remain a concern in (the) medium term,” said ING Investment Management (India) Pvt Ltd, in a report.
With ample availability of funds, realty developers did not bother to cut property prices as expected by the central bank. This has resulted in erratic monthly sales. The sector showed signs of some recovery after July 2009. However, after that, sales dropped due to stiff property prices. The zigzag movement of real-estate sales is slowly mirroring the situation in 2008, when it was hard to report sales by the industry, concluded an industry insider.