Thursday, June 14, 2007

Witnessed 30% dip in enquiries in 3 mths: Orbit Corp

30% dip in enquiries translates directly to 30% lower sales assuming that other 70% enquiries convert to sales in a proportional manner. Mr Aggarwal is also not commenting on indicative dip in prices, calling it inappropriate. Ofcourse when the market was jumping by leaps and bounds I'm sure Mr Aggawal would be happy to say prices are up 50% y-o-y. Mr Aggarwal needs to understand that money supply is finite and astronomical apt prices in Mumbai will crash to the earth. Its only a matter of time

Pujit Aggarwal, Managing Director, Orbit Corporation, that the company did witness a dip in the enquiries by about 25-30% and this trend has been there over the last two or three months.

Aggarwal said that due to the fence-sitters' decision about home buying, there is a sudden huge rush for leasing. He added that as the interest rates begin to cool off, many people will go in for purchasing.

Excerpts from CNBC – TV18’s exclusive interview with Pujit Aggarwal:

Q: Are the volumes dipping?

A: We have seen a situation where the volumes have been on the lower side. We have also witnessed a situation where the enquiries are less.

We have witnessed a dip in the enquiries by about 25-30%, which has been the trend over the last two-three months.

Q: From that point of view are developers willing to negotiate on prices?

A: We have not witnessed the trend, where the developers were willing to negotiate with prices. But there were situations when developers are more certainly offering few freebies, like payments of stamp duty, payment of free car-parking, etc. So those were being thrown in with some additional amenities.

Q: Do you see the strength continuing and how much more pressure do you see coming in on contracts or volumes going forward? As you said there has been a dip and price negotiations are getting more selective by the day. What is a trend really going forward, say for the next six months or December?

A: The trend that we have found is that many people are fence-sitters, because of the interest rates going up and prices cooling off in certain parts of the country. I feel that kind of effect percolating down to Mumbai also. So, many buyers have become fence-sitters; they are waiting and watching.

Buying a house is not a decision that one takes impulsively and on the spot. The fence-sitters think what will happen if we take the decision six months later. So, those decisions we feel are being postponed and delayed; they are waiting for the prices to come down. Once the interest rates begin to cool off, we will witness many people going in for purchasing.

Q: If the scenario continues, how much dip in prices do you reckon by December 2007?

A: There would be some developers who would be under pressure in terms of sales going down and their commitments are being hurt. So, it would depend from company to company and how robust their model is.

Q: On an average could you give us a ballpark dip?

A: It would be very inappropriate for me to give any indicative answer.

Q: Coming to demand concentration, where is it more - leasing or outright sale?

A: Lately, what we found is that because of the nature of the buyer-shifting, he has become a fence-sitter. They have chosen to lease for a year and then postpone their decision to buy. So, all of a sudden we are finding that there is a huge rush for leasing. The leasing model is looking very good and attractive. The prices in leasing are going up, but as far as the sales are concerned, the prices are stable or the freebies are being offered for that.

Q: How do you rate the DLF IPO?

A: DLF is one of the finest companies and has a super presence in the country. I highly respect Hiranandani and his group; DLF IPO certainly deserves respect. As a company and moving forward, I would certainly look at DLF issue very nicely and in a very attractive manner.

Q: Has the entry of DLF increased competition in the realty space?

A: Of course, it is most welcome. More competition, more space and more players are healthy for markets.

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