Won't cut flat price after lockdown is lifted: Godrej Properties MD

The Covid-19 crisis and lockdown are expected to hasten consolidation in the real estate sector and larger players are expected to gain. Godrej Properties, which is known for its joint ventures, will benefit out of the consolidation due to its strong balance sheet and sales capabilities, its managing director Mohit Malhotra tells Raghavendra Kamath in an interview.

How will Godrej Properties benefit from the consolidation that is likely to stem from the coronavirus crisis?

The consolidation is already happening. Those with balance sheet strength and sales capabilities will partner with other developers. We are already sitting on cash of Rs 2,500 crore and have a strong brand name, so we will benefit from the consolidation.

Are you seeing a surge in joint ventures and joint development proposals?

We are getting proposals. But there is no dramatic increase. Once the lockdown opens up, we will get to know the (real) situation.

How did you manage to post healthy sales in Q4 despite the lockdown?

We had done good numbers before the lockdown. We would have done even better had the lockdown not been imposed. During lockdown, we used video-conferencing and zoom calls effectively. We actually reworked sales by leveraging technology. Actually we had digitised our sales process one-and-a-half years ago.

How does FY21 look like and what are you doing to bring back the customer?

It is too early to comment. We have to wait for the lockdown to end. We are not doing anything special. We are in touch with customers through technology. We are using new ways of selling. A lot of innovations are going on.

Will you defer launches scheduled for this quarter?

There are a lot of projects in the final stages of approval. Depending on stage of approval and lockdown, we will take a call.

Do you have any plans of cutting apartment prices to boost sales?

We do not have any plans of cutting prices. The industry has been reeling under a slowdown for the past eight years. There is a limited scope to cut prices.

Barring South Mumbai, very few places have significant completed stock.

Economic slowdown: Realtors slash ad spends by over 50% as sales plunge

International News
The real estate sector, one of the biggest ad spenders during festival season, has slashed its ad budget by over 50 per cent as the sector is facing slowdown in demand due to various reasons including tight liquidity situation.
According to advertising industry experts, the real estate sector which is grappling with liquidity issues and large inventories since demonetisation in November 2016, has massively reduced their ad spends on TV and print media, and have moved a portion of their ad spend to the digital space to cut cost.
"Realty sector has been sluggish since the last two years and deepening general slowdown has only exasperated it," media and digital marketing communications company Dentsu Aegis Network chief executive for Asia Pacific Ashish Bhasin told PTI.Today, most developers are struggling with financial constraints mainly because of plunging demand."Due to this, they have either delayed or defaulted their payments to media agencies, which are now wary to work with such developers," he said.
Bhasin further said real estate companies will be spending more on performance, marketing and sales related efforts than building brand and accordingly have cut their ad spends by almost 50 per cent.Havas Media Group chief executive for India and Southeast Asia Anita Nayyar said, pre-Navratri is the time when developers spend hugely on advertising. But this time around it has just crashed.

 "Since liquidity is an issue, developers are resorting to barter private treaties by entering into brand capital deals with leading news dailies. These treaties could be in the form of publisher picking up some stake for the ad money value by or developers offering space a project to the publication...READ MORE

Connaught Place 9th most expensive office location; Hong Kong tops chart

International News

New Delhi's Connaught Place (CP) is the ninth most expensive office location in the world with an annual rent of nearly $144 per sq ft, according to property consultant CBRE.
CP, located in the heart of the national capital, was at the ninth position even last year.
In its annual Global Prime Office Occupancy Costs survey, CBRE tracks the cost of leasing prime office space globally.
For the second year, Hong Kong's Central district retained the top spot as the world's most expensive market for prime office rents, with the prime occupancy costs valued at $322 per sq.ft.
"New Delhi's Connaught Place - central business district (CBD) retains its ninth position in the list as last year and the office occupancy cost is valued at $143.97 per sq ft," the report said.
Mumbai's Bandra Kurla Complex and Nariman Point CBD slipped to 27th and 40th positions, respectively.
Bandra Kurla Complex (BKC) was ranked 26th and Nariman Point at 37th in 2018 ranking.
The current annual prime rent of BKC is valued at $90.67 per sq. ft and the Nariman Point CBD is valued at $68.38 per sq ft.

 Indian markets continued to have greater investment grade space in the CBDs of the different cities as prominent domestic and global corporates continued to favour investment grade space for setting up front their front offices in these cities," said Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE...Read More

A $23 bn manager is betting on India's struggling real estate sector

Companies News:

A Bahrain-based investment manager wants to fill a vacuum in lending to Indian property developers that have $18 billion of debt to repay, aiming to capitalise on a credit crunch that’s narrowed their borrowing options.

Investcorp Bank BSC, which manages about $23 billion of assets, plans to provide structured lending to developers faced with borrowing constraints, Executive Chairman Mohammed Mahfoodh Alardhi said in an interview in Mumbai. The company started its India operations in January after acquiring the private equity and real estate funds of IDFC Alternatives Ltd.

Investcorp’s push isn’t without risks. Developers are struggling as loans become harder to get from non-bank lenders whose own funding is drying up. The sector is trying to shrug off sluggish sales and price declines that followed a 2016 crackdown on cash as well as new consumer protection and tax policies. Annual debt repayments for developers stand at about Rs 1.29 trillion ($18 billion) against disposable income of Rs 570 billion, according to research firm Liases Foras.

“Real estate in India has headwinds but that’s where the opportunity set also stems from,” Alardhi said. “Core demand from end-users is there, developers need financing and there is limited supply.”

 The alternative investment manager aims to lend to residential developers even as other overseas investors from New York-based Blackstone LP to Toronto-based Brookfield Asset Management Inc. have focused on office space and commercial properties. That decision is a bet on housing demand from more than 400 million millennials in the world’s second most-populous nation, said Rishi Kapoor, co-chief executive officer at Investcorp.