Real estate firm Prestige Estates plans to launch a couple of projects in FY14 and expects to sustain Rs 6,000 per square feet realisations going ahead, says CMD Irfan Razack
In an interview to CNBC-TV18 he says, "There is a lot of activity happening. The momentum is good. The sales gearing is quite good and the demand is coming in and that’s why we were pretty bullish and have given Rs 4,300 crore worth of sales during the year."
Meanwhile, the company is expecting the approval for its Chennai based project 'Prestige Downtown'. Razack finds Chennai market lucrative and thinks the realisations in Chennai will be higher than Bangalore.
Below is the verbatim transcript of Irfan Razack’s interview on CNBC-TV18
Q: You have guided to 14 million square feet of fresh launches in FY14, but you beat your own guidance in FY13 by quite a number. What are the chances that you will do much more than 14 million this year as well? Can you breakup the Bengaluru part with the kind of launches on which you have build this guidance?
A: I am happy that we have been able to beat our guidance and also for the overall numbers that we have declared. As far as the entire breakup of numbers in terms of launches is concerned, most of it will come from Chennai as well as Bengaluru.
We have two developments in Chennai which are almost approved, which will get launched in this quarter and apart from that we have some two-three large developments in Bengaluru, which have got approvals. All this put together, the 14 million that we have guided, we should easily achieve that and if possible we will even try and beat that number.
Q: The other pleasant surprise is the fact that realisations have crossed Rs 6,000 a square feet. Do you see that being sustainable through FY14 as your new launches come in as well?
A: It will certainly be sustainable because even the price movement has happened upward slowly but surely, I don’t want the overall price per square feet to go up too fast. At this level we will do well. In fact, this quarter also we had a good launch in Prestige Westwood, which gave us a good average pricing and we also did an Augusta Golf Village and that has also given a good momentum to us. Overall, this quarter has been fair, moving very nicely.
Q: While Q4 numbers are very strong, sequentially the area sold has slipped a bit for Q4. Could you give us the guidance that you set out for FY14 in terms of how much will be achieved in the first half and which are those specific launches that you are targeting for the first half of FY14?
A: It is difficult for me to break it up quarter-wise. I already told you about Prestige Westwood, which we have launched recently – that’s done extremely well, we have sold quite a bit there, then we have launched Augusta Golf Village and that has also done well.
What is coming in the pipeline is in Chennai, Prestige Downtown. We are about to receive the approval, even that will get launched and there is a good interest for that project and then we have another villa development in Chennai called Prestige Silver Springs.
In Bengaluru, we have the Prestige Sunrise Park and also another new one which we are hoping to do it in the next quarter, the Prestige Lakeside Habitat, which is pretty huge, and even the second part of Prestige Royale Gardens is planned for the Q2 of this financial year.
Overall, there is a lot of activity that is going to happen. The momentum is good. The sales gearing is quite good and the demand is coming in and that’s why we were pretty bullish and that’s the reason why we gave this Rs 4,300 crore worth of sales during the year.
Quarter-on-quarter, we should be clocking Rs 1,000 plus crore, which will total to Rs 4,300 crore that we have guided.
Q: I just wanted to ask on trends, residential versus commercial, specifically on commercial, has that market improved any? Are you seeing any improvement in terms of leasing?
A: Leasing is going on. Even this quarter we have closed out large lease. I can’t tell you the name of the company. It has been a big MNC that we have done for, a building that is under construction. We have also done a transaction to sell to a company 250,000 square feet in outer Ring Road in Bengaluru, some companies are opting to buy, some companies are opting to lease, so it is a mixed bag and the trend is continuing. Like we did the 2 million odd square feet in the previous year and even the current year, we should be able to maintain that 2.5 million square feet of leasing and sale for commercial.
Q: How is the Chennai market shaping up for FY14 in terms of whether the Chennai-Bengaluru mix will change in favour of Chennai this year because of more aggressive launches there? What kind of average realisations are you clocking from that market?
A: Chennai is also quite a healthy market and has so far, done very well. We have tied up a couple of large developments that are still under planning. It all depends on how quickly I get my approval and whether I will be able to launch that in this financial year, like the two developments which are almost approved and will be launched. There are two significantly large tracts of land which we have tied up. We are trying hard to see whether we can even launch it in this financial year, maybe at the end of the year itself. So, there is a demand.
There is a good demand and the price per square feet is much higher than what we are able to get in Bengaluru and that’s a thing of location and how the product is positioned.
One good news that we launched our Forum Vijaya Mall in Chennai on May 1 and are getting great footfalls. We are going to set another benchmark for retail development and that is within the first month of the mall opening, we will have a 100 percent trading, which means all stores will be trading simultaneously within 30 days of the mall opening, which really doesn’t happen. It takes a lot of time for things to pick up, but this is another benchmark that we are setting and it is a good feeling.