Sobha City project to garner Rs 3,000 cr revenue: MD

Bengaluru-based Sobha to set to launch Sobha City, a luxury apartment project in Delhi, VC and MD JC Sharma told CNBC-TV18.Despite signs of a slowdown in Delhi-NCR's realty space, he maintained that demand seems to be picking up.The project offers 1722 flats and the expected realisation is around Rs 3,000 crore, he added.Below is the verbatim transcript of JC Sharma’s interview with Sonia Shenoy and Anuj Singhal on CNBC-TV18.Sonia: There is said to be a big slowdown currently under way in the Delhi-NCR region and Sobha Developers itself has been struggling to meet its own guidance. In FY16, it could not meet its guidance and we have seen three years of very sluggish moves coming in from the company. Do you think it is a wise decision to launch such a big project in a market which is not growing that well? A: There is no denial of the fact that today the market is going through very tough times. There is also no denial that in NCR there are challenges but at the same time we need to look at what is going to happen from now onwards in the next few quarters, next few years and from that perspective our firm belief had been that having invested in International City where we have done more than 1 million square feet of sales so far and having delivered the product on time, we needed a complimentary product.Like in Bangalore, we needed a complimentary product at Dream Acres, we did not have an apartment project. While we may be executing the largest ever villa in last 10 years, we are now proud to say that a developer from south is able to launch the largest ever apartment project in last 10 years or so and maybe the largest in Gurgaon according to our information. Anuj: That point is taken but the question here is that, yes it might be a proud occasion for you but in terms of the kind of numbers that you will get from this project because NCR market is a bit of soft compared to the kind of markets that you are dealing in?A: Absolutely right. No one denies what is the ground reality. However, no one should also deny that there is no demand or there is not going to be any demand any more. The problem most of the customers today are facing is because of the delivery challenges, because of the appreciation challenges. Here the developer is trying to give product to the end user at a price point which is competitive at a location which we believe is unmatched. These are one of a kind of opportunities and having presence in NCR with villas, we thought we needed a complimentary product and that is why this kind of a product is being launched today. We are quite sure and confident that market in NCR as well is turning around for the better and we hope to do significantly better in this year in NCR because of this product. Sonia: What are the realisations at which you will be selling this product and how much by way of revenues you think you can garner? A: There are 1722 apartments, 3.23 million square feet of saleable area. The total realisation from this product is expected to be around Rs 3,000 crore at this point of time. The product starts at around Rs 7,500 odd right now for the guys who will be doing the booking. Sonia: The average realisations per square feet would be what in the Delhi-NCR region currently? A: The base price will be Rs 7,500 or so. Sonia: You have laid out a flat guidance for FY17. You said it won’t grow much compared to FY16 and it will be at about 3.5 million square feet. With this new project would you want to change your FY17 guidance? A: This project was already planned in our future launch projects. We did 3.29 last year and as you very correctly stated, last two to three years, we have not been meeting our projections. So, we thought looking at the environment, we need to be cautious and with this product launch we are sure that we should be able to achieve our guidance in quarters to come.