Real estate has been the talk of the town as the sector is directly linked to repo rate hikes. The Reserve Bank of India (RBI) on December 7 announced a 35 basis point (bps) hike in the repo rate — the rate at which the central bank lends money to commercial banks — to 6.25 percent. A hike in repo rate usually leads to banks hiking the interest rate for loans, leading to a dip in real estate demand. Abhishek Lodha, MD and CEO at Macrotech Developers, told CNBC-TV18 that the demand in real estate is linked more to job creation rather than interest rate.
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He explained that for home loans the main factor to be kept in mind is that it is a 20-year product and the starting interest rate hikes do not have that much of an impact. “We believe that home demand is very closely tied to job creation and job confidence and not really closely linked to mortgage rates or interest rates. We've seen that as rates have risen from 6.5-6.75 percent to now to 8.3-8.5 percent, demand has actually continued to accelerate because it's really driven by the underlying confidence in the economy,” he said.
When it comes to business, the real estate player delivered its best-ever quarterly results in the July-September period. Pre-sales for the quarter were at Rs 3,148 crore, growing 57 percent from the corresponding period a year ago. While collections grew 24 percent from the corresponding period a year ago, on a quarterly basis the collections went down 9 percent, mainly impacted by seasonal factors and lower construction activity during monsoon and shraddh.
| FY23 Guidance | 1HFY23 | |
| Pre Sales | 11500cr | 6004cr |
| Operating Cashflow | 6000cr | 2369cr |
| New project additions | 15000cr | 9300cr |
| Net debt | 6000cr | 8795cr |
“That has been a strategic choice the company has made and almost 90 percent of our sales comes from the housing business. We have a growing business in warehousing and industrial spaces. Our presence in office and retail is modest. We have to take into account global trends when it comes to office occupancy, not only driven by the layoffs, but potentially also driven by things like work from home. You could have short-term aberrations due to the factor X or factor Y but the medium and long terms are very good for any asset class in the real estate space,” he said.
The real estate player operating under the brand name Lodha also announced on Monday (December 12) that it has achieved its minimum public shareholding requirements post the closure of its qualified institutional placement (QIP) issue. The company managed to raise Rs 3,547 crore through the QIP issue, it said in the exchange filing. The price for the QIP has been fixed at Rs 1,026 per share, a slight premium compared to the floor price of Rs 1,022.75.
