'Home buyers can clearly discriminate between credible and non-credible supply'

Abhisheck Lodha

Abhisheck Lodha, managing director of Lodha Group, which is coming up with several premium realty projects in Mumbai, feels the fall in interest rates is set to give a fillip to the sector. He said the credible and non-credible supply of real estate developments need to be looked at separately. He spoke about the market scenario and his company's plans. Excerpts from the interview:

What is your view on the current demand scenario, particularly in the premium segment which constitutes majority of your realty development portfolio?

The market is quite broad and demand is very strong for apartments / properties in the Rs 50 lakh to Rs 5 crore range. Unfortunately, majority of the discussions we get to hear these days is about piling up of supply and how inventory is not selling. What needs to be taken into consideration is that the home buyers can clearly discriminate between credible and non-credible supply. So lack of sales in the non-credible supply is clubbed with sales in the credible supply, but these are two different demands and markets.

Borrowing costs are still on the higher side for the home buyer though...

Some banks have announced interest rate cuts for mortgage financing in the recent past which is a good development for the industry. For the first time in the last two years, we are seeing single-digit interest rates and that's a very strong psychological effect. Overall, the rates are showing signs of coming down as there is a lack of credit uptake in the economy. Housing mortgaging is a long-term safe sector and no bank has ever lost money lending and non-performing assets are barely 0.1% to 0.3%. Banks will be more focused towards mortgage lending, which is good for the sector.

Do buyers in the Rs 3-5 crore range really find these 0.25% to 0.5% reduction exciting enough?

In absolute terms, a reduction of that kind may really not make much of a difference. But if you keep adding the percentage point reductions over a period of time, it is certainly exciting on a cumulative basis. Just two months ago, cheapest mortgage was available at 11% and the rate being talked about currently is 9.5% or so. Now a reduction of almost 1.5% in interest rates certainly makes a lot of sense.

How is the New Cuffe Parade development shaping up?

New Cuffe Parade is a neighbourhood and will develop over time with very unique offerings. We have already launched two developments there and a 63-storied third project was recently launched wherein we roped in UK-based Yoo Ltd to design, brand and market it. The development will have a mix of all the best that the world has to offer. We will keep striving to make sure that the new city centre has everything in terms of design, services and facilities that a project like that should offer. We have already sold more than 70% of the first two towers that were launched in the market.

What is the profile of buyers at your properties? Do you also get a lot of overseas buyers?

While there are people from outside India who have taken interest in this development, majority are domestic buyers. As a company we want to cater to the requirements of people of India, people with really good taste and desire for quality real estate developments. I strongly believe that our own people should be occupants of these apartments. Our developments are planned for the end-users residing in India.

The Indian rupee has depreciated against the US dollar and that appears to be presenting a huge opportunity for international buyers...

We always get such buyers for our developments, but that's just about 10-15% of the overall customer base. It's not very significant. Besides, it is very likely that the rupee could get stronger against the US dollar too, so it may not prove to be such an attractive opportunity then.

With the DLF land parcel acquisition completed, what are your plans for it?

It will be a separate residential project as all the related permissions are in place. I really cannot share details about it at this stage.