Kolte-Patil, Pune’s realty giant has no plans to delay any project launches in the city following a current slowdown, CEO Sujay Kalele told CNBC-TV18.
Pune a booming real estate market now seems to be entering the slow lane. Prices have appreciated from a peak of Rs 8000 per square feet two years ago to above Rs 20,000 per square feet. Real estate rating agency Liases Foras says sales in the April-June quarter has fallen 19 percent year-on-year and 15 percent quarter-on-quarter. It also cautions unsold inventory for a small city like Pune is at a high 54 million square feet.
Kalele however stressed that right sized and prized product still has takers in the market.
“We are not changing any of our plans for launches as of now,” he said. The company has lined up two projects for launch in September. One of this, Tuscan Estate Phase II, is priced at about Rs 6,500 in Kharadi and Allura, lined up at NIBM is priced at about Rs 5,500-6,000 per square feet.
Below is the verbatim transcript of the interview
Q: Can you tell us about Pune realty market, did the company had a bad Q1 this fiscal?
A: Last quarter wasn’t too different, if you compare it with the January-March quarter, the April-June, we were able to do about 0.45 million, which was just about 50,000 square feet, less than what we had done in the previous quarter, so not too much impact as far as numbers go, as of last quarter. In fact the average price realisation for us was about 3-4 percent more on a quarter-on-quarter basis as compared to the last quarter of last financial year.
Q: So sales were a little lower even if you say it is by a margin of 50,000 square feet. Given all this will Kolte-Patil delay launches, perhaps rework business plans?
A: We do not plan to actually delay any of our launches once we receive the approvals. Infact we launched Margosa Heights Phase III in the last quarter which received decent response, that is a project in NIBM area, then we have pre-launched two of our upcoming launches one is in Kharadi, other is again in NIBM. Both the pre-launches were decently successful I would assume and we will continue with the launch plans as per the original plans. We are not changing any of our plans for launches as of now.
Q: Kolte-Patil known as one of Pune’s biggest real estate companies. As objectively as possible, can you tell me, which are the pockets in Pune that are doing well and at that price points should one enter?
A: So, I would assume if we are talking about eastern suburbs Kharadi continues to do very well, Wagholi again continues to do very well because it is affordably priced in the bracket of Rs 3,500-4,000. Obviously, Kharadi is that, ideally priced at between Rs 5,000-Rs 7,000 a square feet. Again, on the Western side we continue to see good traction in the markets of Aundh, Hinjewadi, Baner for a rightly sized product. Obviously, in some of these markets you also have bigger products that are targeted towards high net worth individual (HNI) segment. But if you have a rightly sized and rightly priced products- we are still seeing decent offtake per se in these markets. You do have slowdown when you talk about the markets of Talegaon, Chakan, and some other markets, which are located in the South Eastern part of Pune like Undri where we are seeing some amount of drop in sales. But again if you are in the right market and if you have the right sized product, it is still selling actually.
Q: Given what you are saying then at what price bracket should someone look to invest at in places like let us say Hinjewadi?
A: So for example for a market like Hinjewadi, which is slightly away from the city any price point in the range of Rs 4,500-5,500 per square feet and similarly the product size if it is in the range of 1,100 to 1,500 square feet apartment it is still seeing some offtake. The moment you have a product, which maybe about 3,000 square feet apartment or villas and the ticket size crosses Rs 1.5 crore for a market like Hinjewadi you see some amount of drop in sales velocity, similar to in a market like Baner ideal price is in the range of Rs 6,000-8,000 per square feet and the product sizing maybe in the range of 1,200-1,800 square feet. We have few projects there which are priced at Rs 12,000 and you have sizing which is 4,000 square feet. So again those will definitely have inventory build up because the velocities there are not so predictable like what we have in other products.
Q: You say there are signs of a slowdown in areas like Talegaon. What are the prevailing prices there right now? Have these prices cracked?
A: In the distant markets of Talegaon and Undri and those locations Manjri for example, what happens is the social infrastructure is not yet built up. It is getting developed along with the real estate. So from a customer’s perspective there is always this quandary whether to pay 10 percent more and be present in a market which at least has the infrastructure developed or if its affordability question then be part of a market where infrastructure is not developed. But it will eventually get developed. So, these are the markets that get hit the first if there is some correction. As far as the prevalent rates in Talegaon go, they are anyways hovering from Rs 3,500 to Rs 4,200 per square feet and we feel in those distant markets you might have a price correction of about five percent.
Q: What are you launch plans in the city of Pune?
A: We have two upcoming launches Tuscan Estate Phase II, which is priced at about Rs 6,500 in Kharadi and then we have Allura, 24K Allura another of our 24K offering lined up at NIBM. Hopefully, both these launches should happen around first week of September. Allura will be priced at about Rs 5,500-6,000 per square feet. So, these are the two confirmed launches for which we had already received approvals in the last quarter.
Q: I don't know the specks. What is the final ticket price?
A: For Tuscan Estates, the ticket size will be in the range of about Rs 1.2-2 crore each apartment and for Allura, it will be again pretty much in the same range from Rs 1.2-1.5 crore each apartment. Then we are launching one additional sector at our Hinjewadi Life Republic Township, which is located at Hinjewadi, so those will be all apartments which will be priced at about 5.5, but the ticket size will be from Rs 30 lakh to Rs 55-60 lakh, each apartments.
Q: But from what all you told me earlier, this launch price is more expensive than the market rate, and higher than what you yourself said should be considered as a sound investment? Why is that the case?
A: Yes because this is a 400 acre integrated township, so obviously from a customer perspective right from the start we have always commanded a 10 percent premium to the local market. This is the largest township in that particular area, in fact one of the largest in Pune, so we are able to attract that kind of premium.