Hope to monetise Rs 1500 crore by 2016 end: Pirojsha Godrej

Pirojsha Godrej, MD & CEO Godrej Properties while confirming the news of the company’s plan to monetise commercial assets in Mumbai, Kolkata and Chandigarh to the tune of Rs 1500 cr said it was nothing new and was always on the anvil.He said they hope to complete monetisation of these assets by end of 2016.Talking about the company’s performance he said so far the sales have been up 100 percent year on year with 'Trees' phase I doing well and BKC deal being a key contributor. The company plans to launch phase II of Trees project in coming weeks, he said. The company sold Rs 900 crore of ‘Trees’ in the first phase.With regards to the NCR and Noida regions, he said although the markets have been weak overall, the company has got good response for their project.When asked about the pricing outlook, he said for the near-term prices could be impacted by outside factors impacting the sector but over the medium-term he is hopeful of that if economy picks up and people become more confident, the prices may stablise or pick up.Below is the verbatim transcript of Pirojsha Godrej’s interview with Sonia Shenoy & Anuj Singhal on CNBC-TV18. Anuj: I was reading a PTI report that you want to monetise some of your commercial assets to raise up to Rs 1,500 crore, if you could tell us if that is a right report? A: There was a report about that; there is nothing new about that. We do have a few commercial office buildings; we have always intended to sell. So, it is not any new news but that is a correct piece of information. We do expect and hope to fully complete and monetise these projects this year. Anuj: Just to reiterate if you could also give a time line for this Rs 1,500 crore of money that you will be able to raise? A: There is no definite, this will depend on the ability to sell and how quickly they do get absorb. Certainly our goal will be to sell them in the next year. Sonia: In the next year that would be by FY17 or calendar year? A: Our goal is to sell it by calendar year 2016 but again it is not a very firm or clear target. It is just something that we always wanted to do and goal will again be to do it this calendar year 2016. Sonia: The street got very excited because after you sold some of your BKC office space for such an attractive rate there is expectation that you could do some more very soon. However, just tell us about what the pipeline of the company is looking like? The Trees has done really well how much have you sold so far? How many revenues do you plan to recognise and what is the future looking like now? A: We are quite excited about how the year gone by has gone. It has been a very good year for the company. Our sales are up nearly 100 percent year-on-year. Despite market conditions being quite weak the BKC deal that you highlighted was one of the key contributors to that. The Trees in Vikhroli has also been a very successful launch for us. We have sold nearly Rs 900 crore worth of a space there, almost sold out of the first phase of that project. We hope to launch second phase there in the coming weeks. We also had some important new market entries so we have added a project in Noida and Thane. Both of those we expect the launch next financial year which will be important contributor to our growth there. The Vikhroli project when it enters revenue recognition will depend of course with the accounting rules for real estate on when we reach 25 percent completion in terms of construction which we hope will be some time in the next financial year. However, will depend on the construction speed there, so will be either next financial year or very early in this subsequent financial year. Anuj: What about the situation at BKC? How much inventory do you have and what is the current scenario right now because there is some reports that the traffic problem is big there and that is the major reason that we haven’t really seen incremental development in that region and so much unsold inventory, your take on that? A: I wouldn’t agree with that at all. BKC is by far the most in demand commercial real estate location in the city. We are seeing a lot of incremental demand for our project. We are also excited that the project is now nearly complete from a construction and delivery perspective. So, we expect to complete the project entirely and receive the occupation certificate in the next few months. This will further increase demand but as we saw with a big sale we did for nearly Rs 1,500 crore earlier this financial year we do think there is excellent demand for this space. We think the commercial market has been improving in recent times and is stronger now than it was in the last couple of years. We have seen good visibility of demand for the remaining space. We have about 300 thousand square feet of space remaining to be sold in that project. To put that in context the deal we did earlier this year was for 435 thousand square feet so it is a lower area that we have available than was sold in that one deal. However, the value of that space is significant because even assuming the last sale price that’s the value of about a Rs 1,000 crore for the company. So, we will look forward to monetising that as quickly as we can. Sonia: What about the recently launched Godrej Avenues in Bangalore, what kind of response did you get for that, how have the sales been there and what is the expectation going ahead for some of your other projects like Vihaa, etc? A: The Avenues launch has actually been an excellent one. We will of course put out details on the performance once the launch is complete. The launch only happened a couple of weeks ago so we are still very much mid-launch but I think the response there has been excellent and has exceeded our expectations. Our project Vihaa that you mentioned is nearly sold out, the first phase that we launched here in Mumbai in Badlapur. We hope next year to be coming up with the second phase of that project. So, I think we are quite excited to see that across markets our residential launches have been doing very well whether it is the Tree here in Mumbai, Godrej Prime in Mumbai, earlier this year several recent launches in Gurgaon, this project Avenue is in Bangalore so I think we are quite encouraged with the response we have seen. We will hope to continue to bring new projects to market and add new projects to our portfolio as well. Anuj: Is the NCR market picking since you have also entered the Noida market? A: I don’t think the NCR market as a whole is necessarily picking up. It is actually been quite a weak market but we have been very encouraged with the response our own launch there has received. So, so far we have had launches largely in the Gurgaon market where again we have been very happy with the response we have received. Noida we have just added our first project which we hope to launch later this year. While the market itself is quite weak in both Gurgaon and Noida, we think we are quite confident about our ability to continue to do well in Gurgaon and certainly look forward to making a big bang launch with our first launch in Noida. Sonia: Just wanted your view on the property prices because places like Delhi, NCR continue to see a slide in property prices but in Mumbai things are just not moving. It is great for home owners like us but what is the sense you are getting about the property prices in Mumbai and where they will go in the next three to six months? A: Honestly it is very hard to accurately project short-term movements in prices. I think there are so many different factors that impact them that anything I say would really just be a guess. However, certainly over the medium-term, if as we all expect, the economy starts picking up, people get more confident and the some of the negative perceptions of the sector and price direction start to change, which we think they will as the economy picks up, I think there is a reasonable expectation that in the medium-term, prices will certainly will be at least sable or will pickup. However, in the short-term, I think it will depend on factors that are more influenced by things outside of the real estate sector. So, generally how the economy does, generally how people sentiment towards the economy is and if those continue to be very negative, we could see a short-term price correction as we have seen in somewhere like NCR. However, my sense is that the medium-term is ultimately the more important and there I think there is good reason to be quite bullish that at least prices will increase in-line with inflation.