DLF bets big on The Camellias, sells apartment for Rs 18cr

Realty player DLF made a fresh all-time 52-week low of Rs 120.25 paisa a share on August 06, the realty major’s Rs 1,600 crore deal to sell the ultra-luxury Aman Resorts back to the founder Adrian Zecha had been delayed by over five months.

The deal was initially suppose to close in late February and the deadline was later extended to June 30. Since then DLF has terminated the exclusivity clause with Adrian Zecha and started quoting global private equity players.
The DLF share price has been under pressure despite getting a big relief at the Supreme Court. A Residents Welfare Association (RWA) of DLF Park Place in Gurgaon has told the apex court it will withdraw its writ petition at the Chandigarh High Court. This RWA association had filed an ex parte writ petition alleging DLF was encroaching on its condo property with the launch of The Crest.
The Chandigarh High Court had banned DLF from selling and advertising The Crest, an order that had been stayed by the Supreme Court. The Crest is located at Gurgaon’s famous Golf Course Road and marks DLFs first launch here in over five years. The Crest is an important high-margin project for DLF. It has already sold 250 apartments and DLF in the past has said The Crest will play a vital role in debt reduction.
With the basic price of Rs 15,500 per square feet the starting price of a 2BHK is Rs 3.4 crore and goes all the way upto Rs 6 crore for a 4BHK. This does not include charges like PLC, parking. Penthouses are more expensive with the basic price of Rs 16,500 per square feet costing upto Rs 10.3 crore, getting a green signal on The Crest was very important for DLF’s other big-ticket launch. It is the third edition of apartments at the DLF Golf Course, called The Camellias, DLF is selling an apartment here for a jaw-dropping Rs 18 crore or around Rs 25,000 per square feet, this excludes PLC or other charges like four mandatory parking slots for Rs 40 lakh.
This week CNBC-TV18 interviews DLF’s CFO Ashok Tyagi to know more about the deal and the launch of The Crest. Below is the verbatim transcript of his interview on the channel Q: What exactly happened over the launch of The Crest?
A: We have been very clear about the legal facts of the case on The Crest and are very confident of all our facts. The project unfortunately got mired into some legal controversy earlier. However, the Supreme Court has granted a stay earlier as well and we got a more permanent stay on July 31. I haven’t yet seen the detailed judgement copy, so I can’t comment beyond that, but every development that reduces the uncertainty is a welcome development. Q: Now that there is legal clarity when exactly will DLF launch the next phase of The Crest?
A: Phase I was a spectacular success. We sold apartments worth Rs 1,500 crore in a matter of few days. It had extremely strong demand. So, from our standpoint The Crest phase I was a very big success. Phase I is only one third of the total project size. So, at some stage the phases II and subsequent would come into the market. But right now it will be premature for me to comment and speculate as to when we would launch the next phase.

_PAGEBREAK_ Q: At exactly what price will you launch the second phase?
A: It is difficult to answer that right now. Let us see when we launch it and what is the market price then. Q: The next big-ticket launch for DLF is Camellias on the DLF Golf Course in Gurgaon. The pre-launch has been at Rs 25,000 per square feet or Rs 18 crore an apartment. What has the response been like? How many apartments have you sold?
A: The Aralias, Magnolias and now the Camellias are “sold by invitation” predominantly. So, a soft launch of the Camellias has begun. We have been getting extremely enthusiastic response for the Camellias and we hope as the quarter progresses we should continue seeing strengthening of sales from hereon. Q: How many apartments has DLF sold here and can you confirm the pricing of Rs 18 crore an apartment?
A: I have been prohibited from talking specific numbers, but the Camellias pricing has been at the targeted range that we were looking at. Q: The targeted pricing shared with analysts a few quarters ago was Rs 18 crore an apartment. When you officially launch The Camellias, will it be at the same price or are you likely to hike prices?
A: The Camellias will continue selling in the short-term in mid-20s price range. Q: The official launch will be at a basic price of Rs 18 crore. What about the Gurgaon realty market, people are saying investors have started exiting, there are pressures that we are seeing even in re-sales and the secondary market?
A: This is speculative because there are some micro markets where one has seen the resale prices beginning to trend down slightly. But I have always maintained that given the increase in inputs costs, labour availability and the huge underlying demand for real estate as an asset class I don’t foresee a significant correction in prices as a lot of pundits keep on forecasting. Q: DLF’s recent track record in meeting project timelines has been far from good. Are delivery timelines back on track?
A: From an execution standpoint, we have handed over virtually the complete Belaire, Park Place, and Magnolias the phase V piece. We are right now in the midst of almost an equally significant handover process in the new Gurgaon, we are in a midst of a handover process in Chennai. So, from an execution and a handover standpoint we are starting from about 9 months back till about a year into the future, we are looking at handing over almost 30 million square feet of properties, most of which are now in extremely advanced stage of closure. Q: You are saying execution is back on track, but why should buyers believe you? Why should they believe that DLF is actually going to stick to project timelines?
A: Going forward, as you have seen in some of the recent payment plans that we have launched, we are forecasting a slightly longer timeline than what we used to forecast in the past. Also, the type of contractors that we are now working with, we anticipate that some of the execution delays should not happen and this has been a company, which for 60 years has been delivering products.
At times they have been delayed by a few months, year, but the fact is from an end delivery quality and an end delivery standpoint we have a 60 years record to speak of. Q: Do you mean cash problems are things of the past and that is why projects won’t be delayed going forward?
A: No, I don’t think we ever had a delay on account of any shortage of cash. The delays if any were on account of some intermittent construction approvals, issues maybe on account of some contracting issues and most of them are now behind us.