Ansal Properties was up almost 8.5 percent today, reacting to a good December operational performance that they have reported. In an interview to CNBC-TV18, Dinesh Gupta, COO of Ansal Properties spoke about the expectations in 2013 and the challenges ahead.
Ansal Properties rose today, reacting to a good December operational performance that they have reported. In an interview to CNBC-TV18, Dinesh Gupta, COO of Ansal Properties spoke about the expectations in 2013 and the challenges ahead.
The company’s total sales grew by 10 percent year-on-year (YoY) to 1.45 million sq ft and the total realisations have improved to Rs 1,534 per sq ft.
Gupta sees a sales target of 16-18 million sq ft achievable. He does not think a target of about 16-18 million sq ft is a challenge and believes the company is likely to achieve it.
Below is an edited transcript of Dinesh Gupta’s interview on CNBC-TV18
Q: Can you give us an update on the total sales that you have done this time around and whether you can meet your sales target of 16-18 million sq ft that you have lined up for this year?
A: In December, 1.45 million sq ft has been achieved making it about 15.7 million sq ft for the nine months FY13. At the same time, the sale value has also notched above our expectations in the beginning of the year and for the nine months we have achieved about USD 20 billion sale value in total.
As far as the average realisation is concerned, the average realisation excluding the floor space index (FSI) is Rs 1,534 per sq ft. For the nine months FY13, we have achieved almost Rs 2,000 excluding FSI which is about 26-27 percent up y-o-y. Most of the projects have seen a premium and development happening and prices are going up in most of the territories that we are operating.
Uttar Pradesh is the largest contributor to the sales as well as the sales-value for the nine months. We have achieved about 16 billion sale value from Uttar Pradesh itself, out of total USD 20 billion. That is almost 75 percent sale value as well as almost 70 percent of the sale volume coming from Uttar Pradesh.
If you compare YoY for the month of December, the average realisation overall for the month is slightly down because of the higher sales number reported on the FSI, which are generally lower than the average. This is because there are no constructions involved and these are pure trading of FSI or TDRs, as you call it in Mumbai. So keeping that in mind, the target of about 16-18 million sq ft, I do not think that should be a challenge.
We are all set to achieve that. We might have a revision in the guidance in the month of January after we have seen 10 months and shall report the revision in the guidance as well. As of now 16-17 million sq ft looks achievable and sale value as we had given our guidance on is achievable.
Q: What absorption trends are you seeing in the National Capital Region (NCR), do you think Rs 1,500 per sq ft is sustainable and what kind of run rate can you do in terms of realisations?
A: The average realisation that is being reported is a mixture of a lot of territory. The average that we report has a minimum of Rs 500 a sq ft and the highest going upto even Rs 7,000 a sq ft. So Rs 1,500 a sq ft is because we operate in Rajasthan, Punjab, Uttar Pradesh there are certain low price products as well in most of these territories like Agra or Meerut which are much lesser than NCR.
The proportion of NCR sales is much lower than these cities. Therefore, the average realisation looks at about Rs 1,535. If you look at the reporting numbers, on an asset class by asset class basis also, we have seen an upside of about 30-50 percent in plotted developments or even in lowerised group housing and even in FSI, we have seen almost 80 percent jump YoY. So keeping all those facts in mind and on the basis of the fact that development is happening on ground, we see almost 10-11 percent average realisation increase every year and that is the target of the management.
In last two-three years, we have been seeing the strength because sales absorption is happening. You have to be in the right territory and at the right price point to have those traction. Unless you have those things in place, it is going to be difficult whether it is NCR or out of NCR.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.