Recent data points indicated continued strong residential demand in Gurgaon and Bangalore.
Various launches in the recent past have been received well: (1) Godrej Properties launched Godrej Summit and sold entire Phase I of 1 mn sq. ft at price point of Rs5,500/sqft, (2) DLF launched Independent Floors in Gurgaon, (3) Phoenix Mills sold 275 apartments in Phase I of “One Bangalore West” at selling rate of Rs7,000+/sqft, and (4) Sobha recently launched 2 new projects in Bangalore – Sobha Morzaria Grandeur, a luxury project at Dairy Circle and Cedar at Sobha Forestview on Kanakpura Road.
Furthermore, selling prices achieved indicate that buoyant sales are not a result of pricing discounts. We believe demand environment can get a further boost in case of improvement in economic sentiment and reduction in interest rates. A 50 bp reduction in interest rates can reduce EMI of 20-year loan by 3%.
Robust demand in Gurgaon will likely help DLF as it launches residential projects with cumulative sales values of Rs60+ bn in 2HFY12. Success of ‘Godrej Summit’ indicates Sobha’s largest project (Sobha International City in Gurgaon, 15% of NAV) will see continued traction. DLF is planning to launch 2.5 mn sqft in Phase V in Gurgaon in 2HFY13.
