Cos won't offer discounts; will launch 2 projs in NCR: DLF

On the road ahead, Tyagi says the company is doing all it can in order to get all the clearances for Mall of India. The mall’s construction was stopped as the project falls within 10 km of the Okhla Bird Sanctuary, considered to be an eco sensitive area. The project, scheduled to open in March 2015, is huge for the company as it has invested Rs 1100 crore and has already leased out 90 percent of the area.

The company is eyeing a major launch on the Golf Course Road and one in new Gurgaon area. Once these are launched, the company may also look at new projects in other parts of the country. The company has also started a massive handover drive of the projects completed in 2007 and is seeing significant success in Chennai and Bangalore.

Below is the edited transcript of Ashok Tyagi\\'s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: Some offline interactions with developers indicate that prices in the NCR, Gurgaon region are coming off a tad bit and the absorption levels have gone down considerably. Would you concur with that view?

A: That was true till a quarter back that the prices especially in the secondary market were off a tad bit and obviously the off take was slower. What we are seeing in the last couple of months is that at least there is some return of sentiment of buying back in the market. Is it translating to dramatic increase in hard numbers, the answer is no but the trending looks marginally more positive now than what was looking a quarter back.

Latha: What about price levels, is there slight return of interest predicated on developers having to drop prices a bit, increase discounts?

A: In all the limited knowledge that I have, in terms of primary sales the prices haven’t dropped in the Gurgaon region for sure. In the secondary market the prices seem to have stabilised, in fact in some isolated segments the prices in the secondary market are marginally inching upwards again but to your question that would a significant price cut dramatically alter the sentiment. I don’t know for sure but let us see whether the sentiment improvement translates into better growth in numbers maybe in the coming one-two quarters.

Latha: You think developers would experiment with that, try some discounts to bring back the buyer?

A: The developers in all fairness are experimenting what one sees is with a couple of things – (a) the ticket sizes (b) the payment plans, so you see flurry of the variants of 30:70, 30:40, there are so many different payment plans there. Therefore, what I am saying is that people are experimenting in terms of getting more optimum ticket sizes for sure and trying to make the payment plan more user-friendly to the degree each individual builder’s finance afford it to be.

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Sonia: Can you help us with what the new launches will be for DLF in the Gurgaon region in the next 6-12 months and also will these new projects be launched at lower prices in order to boost demand?

A: What we are looking for is hopefully in the next few months at least one major launch of the next phase of one of our properties on the Golf Course Road and possibly one more new launch in the New Gurgaon area which is the further ahead areas of Gurgaon, further head sectors of Gurgaon. So, we are looking at these two launches with Gurgaon. Hopefully if the sentiment and everything improves, we may also potentially look at one-two launches in the other parts of the country.

Sonia: Since we are talking about the business of the company, I have to ask you what is happening with Mall of India because the lack of environmental clearance has thrown a spanner in the works for that project but have you had any interaction with the UP pollution board on when the clearance could come through and when work could restart there?

A: Because it is a matter which has been dealt between those regulators of the pollution board as well as possibly the wild life and all of those things. I wouldn’t hazard a specific comment but our legal team and our operating teams are working with the regulators to find a solution on that piece. The mall is physically almost up.

Sonia: I do know that and that was a disappointing bit at this late stage you have got some hurdle into that project but earlier when we had interacted with you, you said that the mall could open or schedule to open by March 2015. Do you think that timeline will get delayed now?

A: I wouldn’t hazard a guess on how much time it will take to resolve this issue but we hope that it is not an inordinate delay and the mall can still open broadly in the same time zone that we are talking about.

Latha: You spoke about the NCR-Gurgaon region. What is the feedback you are getting from other major real estate pockets since you are a veteran in this space? Are you getting a sense of first time buyers coming in regions like Bangalore, Mumbai? Ultimately the increasing of the entire demand pie is what makes a market robust or healthy. Are you seeing that first time buyer returning in any pocket?

A: What one reads from the secondary news reports does look that a couple of micro markets in the south specifically Bangalore seem to be sort of witnessing that and couple of results that you see from Bangalore area do indicate that. In Gurgaon gradually what one is seeing is a slight return of interest across the price segments, I presume both in the mid market which will impact the first time buyers to the luxury market where people who are investing are not first time buyers maybe second or third home buyers. So, one is seeing some form of return.

However, in all fairness one should wait at least for one quarter if not two more for one to draw definitive conclusions that the sentiment and the buyers are firmly returning back to the market. Let us also wait to see whether the Governor makes any move in next six months on the interest rate front. I have always maintained that every 25 bps doesn’t make an impact but directionally the fence sitters may also be waiting on what direction is taken on that issue.