Home >Companies >People >Residential recovery has been faster post 2nd wave: Abhishek Lodha

Macrotech Developers Ltd, which operates under the Lodha brand, listed on the stock exchange in April after raising 2,500 crore through an initial public offering (IPO), just before the second wave of the covid-19 pandemic gripped the country. The Mumbai-based developer hopes to meet its pre-sales guidance of 9,000 crore this year, if there are no further disruptions because of the pandemic. Macrotech is betting big on the residential and industrial real estate space. In an interview, Macrotech managing director and chief executive officer Abhishek Lodha spoke about business recovery after the second wave, luxury housing, and the debt reduction target, among other things. Edited excerpts:

Was the impact of the second wave of the pandemic on business different from that in 2020?

The June quarter was an interesting period. The country suffered a very challenging time and the second wave wiped off most activities, except for construction to some extent. This time around, the organized sector came back very strongly. For homebuyers from the organized or corporate sector, there was not much of a financial hit. Even in June, when everything had not opened up, business was returning to normal. There is a stark difference from last year, when the three months, April-May, were wiped out and we did not know what hit us.

How has the housing sector responded to the disruption this year?

Fundamentally, the demand for housing remains strong. We saw strong sales in June and home loan rates continue to be attractive. We continued to spend money on construction even in April and May. In the January-March quarter this year, there was recovery after the first wave, and we did 650-700 crore of monthly sales. We did about 650 crore of sales in June right after the second wave. So, the rebound has been faster in the residential sector this time. The supply and demand in the residential sector are more balanced now and homebuyers realize that prices are starting to rise and it is a good time to buy.

How do you compare the performance of the mid-market and premium housing segments?

We know that the affordable and mid-market segment have been the resilient part of the business for a while, when the residential segment was going through a low. That momentum continues. About 50% of our sales are from this segment. The premium segment, however, has surprised us. Even in June, as we were recovering from the second wave, this segment contributed well.

The premium homebuyer was circumspect in the last few years, thinking that rental yields are low and expecting prices to fall. The fact is good quality housing in premium locations is in short supply. Working professionals from the organized sectors have surplus savings and their other big expenses such as international travel and holidays have stopped. Home has become the focus of our lives. Across the globe, housing is at an all-time high.

India has just started and there is room for significant growth. Housing is at the start of a multi-year bull run both in prices and volume.

What is the debt reduction status?

We continue to pare debt and reduced our net debt by 3,641 crore in the June quarter. The current debt levels are 12,435 crore (against 16,076 crore as on 31 March 2021). We are on track to reduce it to below 10,000 crore by March 2022. The cost of debt, too, has gone down.

What is your project pipeline?

In the June quarter, we signed four joint development agreements in the Mumbai Metropolitan Region (MMR) and Pune, expanding our residential reach in different micro-markets. The projects are across 3.3 million square feet with an estimated sales value of around 3,500 crore. A couple of these projects are expected to be launched in FY22.

We also see digital infrastructure (warehousing, data centres and industrial parks) as a big opportunity and a number of ongoing discussions around our industrial park at Palava have strengthened our belief in this space.

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