COVID-19 impact: DLF to launch a mix of ready-to-move-in and under construction housing units depending on demand and opportunity

In the midst of the COVID-19 pandemic, leading Delhi-based real estate developer DLF Home Developers Limited’s strategy would be to focus on launch of both completed and under construction units, including independent floors.

The company has also launched a luxury rental programme for its high-end apartments in Gurgaon on the back of demand from existing owners and the expatriate community during the lockdown.

As per a regulatory filing, DLF has under construction housing units spread across 8 m sq ft. These have a sales potential of Rs 12,000 to Rs 15,000 crore. Sales of the first phase of nearly 2 mn sq ft is expected to commence in the fourth quarter of the financial year 2021 or the first quarter of financial year 2022.

The mid-income housing pipeline is expected to be spread across 10 m sq ft and has a sales potential of Rs 5,000 crore. These are expected to be launched in phases commencing in the first half of the financial year 2022.

As for the premium luxury housing, the company has a pipeline of 8.5 mn sq ft with a sales potential of Rs 9,000 crore. The launch of these units is planned in phases over the next four to six quarters commencing in the third quarter of the financial year 2021.

In the second quarter this year, the company has seen at least 95 percent collections even during the lockdown phase, the company said.

It should be recollected that DLF’s new business strategy (before the lockdown) had focused on selling only completed homes in order to do away with any uncertainty that may arise on account of delivery timelines. Post the pandemic, the company plans to launch a mix of both completed and under construction housing units.

Besides the company’s super-luxury portfolio that also comprises of residential plots, the company has a ready inventory in projects located across the country.

“Going forward, the company will continue to offer ready-to-move-in inventory while also putting on sale the under construction units,” Aakash Ohri, Senior Executive Director, DLF Home Developers Limited told Moneycontrol.

Aakash Ohri Senior Executive Director DLF Home Developers Limited

“We will be keeping both the ready inventory and the under construction units ready and will take a call on which units to launch in the market and at which part of the cycle. The decision will be driven by opportunity and demand,” he told Moneycontrol.

“Our ready inventory is currently down by half. We were at Rs 12,000 crore of ready inventory earlier this year and are now down to inventory worth Rs 6000 crore. Of this, inventory worth Rs 4,000 crore comprised of super luxury residences. The ratio split between super luxury apartments versus the rest is 70:30,” he said.

The company is also planning to rework ticket sizes to suit mid-income homebuyers and is looking at increasing this portfolio this fiscal.

As for the luxury segment, the company currently has about 75-odd super luxury units that are ready.

Lockdown impact: Rental programme for luxury units

During the pandemic, the company received several enquiries for immediate movement into Golf Link super luxury residences - Camellias. These enquiries were both from owners wanting to move in from their bungalows in South Delhi into their apartments as also from embassies to house expats.

As a result, the company decided to float a rental and leasing arm in June this year.

“This was largely, because a lot of people living in bungalows/ stand-alone homes, realized the kind of challenges they faced during the lockdown in terms of facilities and services, which were provided for seamlessly at the Golf Links residences. As a result we have introduced a luxury rental program of Golf Links,” he told Moneycontrol.

The company has introduced the rental programme for several projects such as Magnolias and Aralias.

On the back of this demand, the Golf Links residences today command perhaps the highest rental yields in the super luxury segment in the country in the range of 3.75 percent to almost 4 percent, he claimed, adding “we have broken the myth that rental yields in India cannot be more than 1.5 percent.”

Bullish on floors

With demand for low-rise plotted developments increasing during the pandemic, the company recently launched independent floors.

“We have launched about 88 floors recently and almost 85 percent of them have been lapped up by end-users,” Ohri said.

The company now plans to launch a similar product in Panchkula Tricity and new Gurgaon and “wherever there is an opportunity in DLF phase 1 to 4,” he said.

“We have realised there is real demand for floors. During the pandemic, people have realised the importance of owning a house and most want to live close to the ground instead of high-rises. These units are priced between Rs 3.7 crore and Rs 4.25 crore. We have so far sold almost 100 units and are now planning to roll out more going forward. We may also venture into Deen Dayal Jan Awas Yojana scheme,” he said.