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Business News/ Industry / Infrastructure/  Lodha group hopes customers will bite at top end of market
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Lodha group hopes customers will bite at top end of market

The developer is busy promoting its World Towers project that it claims will be the tallest residential building in the world

Lodha group says nearly 60% of the World Towers project has been sold. Photo: Sanjay Borade/Mint (Sanjay Borade/Mint)Premium
Lodha group says nearly 60% of the World Towers project has been sold. Photo: Sanjay Borade/Mint
(Sanjay Borade/Mint)

Mumbai: Lodha Developers Ltd, which specializes in upscale apartments for the super rich, is busy promoting a tower in Worli in Mumbai that it claims will be the tallest residential building in the world, ensuring that residents are situated far above the urban snarl after having paid around 12.5 crore for the privilege.

The breathless tone of the advertising for World Crest may not necessarily convince those who can afford such accommodations.

“Many companies resort to marketing gimmicks as the number of luxury projects have gone up," said Sridhar Ramanujam, chief executive of brand consulting firm Brand-Comm Pvt. Ltd.

The real estate sector has been going through a weak phase, because of approval delays, rising costs and high interest rates.

A 15 April report by Edelweiss Securities Ltd said the Mumbai property market will remain subdued in the first half of fiscal 2014. There may be an uptick in the second half supported by pent up demand, lower interest rates and economic recovery.

There’s a glut in the market, said Rohan Dsilva, national director, residential agency, at real estate consultant Knight Frank India. “About 15-16 million sq. ft of property is in pre-launch and underdevelopment stage in central Mumbai, of which 8-9 million sq. ft is in the luxury segment (higher than 10 crore). There is a lot of supply but sales are down by 30-40% compared to last year."

According to a 15 March report by Knight Frank, Mumbai ranks seventh out of 30 cities worldwide with 2,105 high net-worth individuals, or HNIs, people with a net wealth of $30 million and above. It said Mumbai’s HNIs will rise 37% to 4,988 by 2022.

The Lodha group spokesperson said nearly 60% of the World Towers project has been sold.

Lodha is developing in excess of 30 million sq. ft of prime real estate, with at least 27 projects in and around Mumbai. It has the potential to develop up to 50-60 million sq. ft of land, said Sanjay Dutt, executive managing director, South Asia, at real estate consultant firm Cushman and Wakefield. “Lodha has come up over the last 10 years," Dutt said. “No other developer in the country is developing so many projects at one time."

In comparison, India’s largest real estate developer DLF Ltd has 332 million sq. ft of planned projects with 62 million sq. ft of projects under construction, according to data available on the firm’s website.

Unitech Ltd’s website says it has a total deliverable area of 52.5 million sq. ft and has sold 4.4 million sq. ft of residential property by December 2012.

Lodha group is not a listed entity and doesn’t release financial data. But according to the information filed with the registrar of companies, Lodha is still fairly low down on the pecking order. It posted a profit of 30 crore in fiscal 2012 compared with 14.6 crore in fiscal 2010. (Data for fiscal 2011 is not available.) Total income rose to 332 crore in 2011-12 from 235.6 crore in 2009-10, while total expenditure increased to 72 crore from 21.5 crore. A real estate consultant, who did not want to be named, attributed the rise in expenses to multiple projects being underdevelopment.

In contrast, DLF’s revenue for fiscal 2012 stood at 9,629 crore while net profit was 1,200 crore. Revenue in the March quarter was 1,310 crore while net profit was 285 crore. Unitech’s revenue for fiscal 2012 was 2,421 crore and net profit was 237 crore. Revenue for the March quarter stood at 644 crore and profit at 84 crore.

Among Lodha’s other projects is the Blue Moon residential project on a 17.5-acre parcel in central Mumbai that it acquired from DLF at 23,000-25,000 per sq. ft in January. Apartments here were sold using what Lodha calls an initial public method. This means that the price band is known only to potential customers and an automated algorithm system is used to allot apartments to buyers.

“In January, Lodha sold two buildings in its Blue Moon project for 4,000 crore. The total number of flats sold (was) 800," the company said.

Lodha group, which is known for its aggressive sales strategy, will have to raise cash for its multiple projects but has been deferring plans to go public since 2009 due to unfavourable equity markets. A 1 February 2010 PTI report had said Lodha plans to dilute a 15% stake for 2,790 crore.

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Published: 14 May 2013, 12:33 AM IST
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