In what may come as yet another negative view for potential home buyers, Ashok Tyagi, group chief financial officer, DLF, says realty prices are unlikely to correct in the days to come.
Citing high labour and commodity prices, Tyagi says the prices, especially in the Delhi-NCR region will not decrease. He believes the long approval cycles for most of the realty projects are also a deterrent for lower home prices.Also read: 'RBI's hike in key interest rate to hit property market'However, at a time when people are awaiting some fall in prices, thereby, lowering demand, Tyagi remains unfazed by lesser sales. The sales in Q3, October-Novermber-December, he says were flat to slightly negative, hinting to the fact that realty has not yet bottomed-out. “Yes, demand has slowed, but we are not yet in a panic situation, as the underlying demand still does exist” he adds.
On what the government can do to give some boost to the sector, Tyagi has listed a few demands:
1. Macro interest rates need to be stable. While Tyagi recognises Reserve Bank governor Raghuram Rajan’s attempt for the same, he says more stability will aid the sector and sales.
2. Need more clarity on the foreign direct investment (FDI) norms for the sector and further clarity on external commercial borrowings (ECBs).
3. The guidelines on real estate investment trust (REIT) should be explained in detail, says Tyagi, especially the taxation bit of it.
And on one of the main issue that keeps analysts cautious on the stock - the company’s large debt- Tyagi has maintained confidence. Tyagi says the country’s largest real estate player will pare debt by Rs 2000 crore to Rs 17500 crore by March-end.
This paring of debt, Tyagi is hopeful, will be aided by the Aman Resorts’ sale that has been on the blocks for over two years now. DLF, in August removed its exclusivity clause with Aman Resorts’ founder Adrian Zecha and is now negotiating with 5-6 bidders for a fresh deal.DLF is further likely to launch two new projects in the new Gurgaon area in 2014.“We should be launching the next phase of one of our schemes in the DLF phase five. We will continue to keep on offering fresh stocks in both Camellias and the commercial spaces that we have here. We should hopefully be bringing the next phase of our projects in Delhi and continue selling some of our stocks both in south and in Chandigarh,” concludes Tyagi.
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