Bangalore: Property sales in the three months ended 30 September were muted across India, with only Bangalore displaying some resilience.
Projects in the city, especially those priced in the mid-market, attracted buyers.
India’s largest property market, the National Capital Region (NCR—Delhi and its environs), continued to lag, while Mumbai showed some signs of recovery, although the overall market remained weak.
DLF Ltd, the country’s largest developer by market value, may not see a significant surge in sales in its residential projects, but its rental portfolio has fared well in comparison, say analysts, who expect to see this reflected in increased profitability.
Developers and their partners hint at a gradual improvement in consumer enquiries and buyers making up their mind sooner than they used to, but this is yet to reflect in sales numbers, says a September report by Motilal Oswal Securities Ltd
. Investor demand remains subdued, with no urgency in buying, it said.
“In Mumbai, Hyderabad and Chennai, demand was stable and supply addition was limited in September, as developers plan to launch projects during the festive season to improve sales. Investor sentiment continues to hurt demand in NCR, though there was slight uptick in August, with a few launches,” said Sandipan Pal
, analyst, Motilal Oswal Securities.
DLF may see its second quarter net profit rise 37.83% to `137.8 crore from a year earlier, according to a Mint survey of five brokerages. Its revenue may drop by 5.83% to `1,842 crore in the same period.
Edelweiss Financial Services Ltd
analysts Aashiesh Agarwal and Akshay Rao said in a report that the key thing for DLF would be a recovery in the Gurgaon market and, consequently, in the company’s development property business.
“DLF’s rental income is expected to increase, also leading to a rise in margins. However, the company needs to now show sales from its residential projects as well,” said Adhidev Chattopadhyay, analyst, HDFC Securities Ltd
The developer has suffered a slew of setbacks in recent months. The Punjab and Haryana high court in September ordered the cancellation of a 350-acre land allotment in Gurgaon authorized by the Bhupinder Singh Hooda
government in 2009. This followed a Supreme Court order in August asking DLF to pay a `
630 crore fine imposed on it by the antitrust regulator for unfair business practices.
In another huge blow, this week, the Securities and Exchange Board of India banned DLF and seven of its top officials, including promoter and chairman K.P. Singh, from tapping the capital markets for three years.
On Tuesday, shares of DLF ended at `104.95 each on BSE, down 28.46% from Monday’s close.
Bangalore-based Prestige Estates Projects Ltd
will likely post a 31.62% rise in its second quarter net profit to `
102.16 crore, said the brokerages. Its revenue is also expected to go up 19.63% to `
Though the Bangalore property market has started showing signs of weakness, Prestige Estates
had largely been immune to this and continued its good run in terms of both sales and launches, said analysts.
Motilal Oswal’s Pal said that the company has already achieved 58% of its sales guidance for the full year and enjoys the confidence of both actual home buyers and investors due to its balanced mix of projects and timely launches.
Prestige Estates raised around `615 crore in August through a qualified institutional placement.
Another large real estate firm, Mumbai-based Oberoi Realty Ltd
’s revenues and profits are expected to be subdued yet again, with only its Oberoi Exquisite project contributing to revenue, said the Edelweiss Securities report.
Sequentially, DLF may see a 29.56% fall in net profit and 12.17% rise in revenue the Mint survey of brokerages showed.
On a quarter-on-quarter basis, Prestige Estates is expected to witness a 14.6% rise in net profit and a 7.9% rise in revenues for the September quarter.
On Tuesday, the BSE Realty Index fell 9.2% to close at 1,419.23 points.