New Delhi: DLF Ltd, India’s largest listed real estate firm, sees signs of recovery in the country’s beaten down residential property sector and expects prices to start firming up, a senior official said on Monday.
Still, Rajeev Talwar, group executive director at the developer, said projects needed to be priced aggressively in order to sell.
Talwar told Reuters in an interview a stable government and a view that the economy may be improving would help demand for real estate, after a property slump that analysts said has seen prices crashing by up to half.
“I think we’ve done a fair amount on price correction, realistic pricing or aggressive pricing as it may be called,” Talwar said.
“I think all Indians have imposed their faith to very immediate economic revival, rather than long term,” Talwar said.
Last month’s decisive victory by the ruling Congress party-led coalition has fuelled market optimism that reform measures will help drive economic growth.
The main stock index is up about 90% from an October low.
“So it would stand to reason that ‘yes’,” he said when asked whether he expected the housing market had bottomed out.
“In fact why only bottom, if demand is rising, prices should be hardening or firming up. At least the trend would be to move upwards, rather than to go downwards,” said Talwar, a former member of the country’s elite Indian Administrative Service.
Real estate stocks have nearly tripled from their March low, but remain about 74% below their early 2008 peak at the end of a three-year bull run in property prices.
The past 18 months have seen a rough run for Indian property companies.
Heavy debt and a slowdown in fund flows to real estate projects in India forced the founders of 63-year old DLF to sell shares to institutions last month to raise funds.
DLF’s founders, KP Singh and family, raised $783 million by selling 9.9% stake in the firm, which cut their holding to 78.6%.
Talwar said the founders intended to maintain their current holding.
“I think what they have announced is that no, there is no further scope of disinvestment,” he said.
India , which is plagued by homelessness in its cities, needs an estimated 25 million homes, and Talwar said public-private partnership is key to helping bridge that gap.
He said mid-range housing to serve the country’s “bustling middle class” would make up the bulk of DLF’s residential business.
Recent project launches by DLF have been priced aggressively and sold quickly as a result.
For example, a new development in Delhi sold 1,400 flats within 24 hours of its April launch.
“I think the lesson that we’ve drawn from the last year, year and a half is that if you price your product appropriately or competitively there is a market which is waiting to lap it up,” he said.
“There is a demand if pricing is appropriate, aggressive, and competitive. People need to see the value for money.”