DLF to focus more on high-rises: Chairman Rajiv Singh

DLF will focus more on high-rise housing going forward, but floors will be a significant contributor for the next few years, the company’s chairman Rajiv Singh told investors.

"I do like to believe that maybe we'll have no more floors left and everything will get converted to high-rise housing," Singh said.

According to DLF, housing demand continues to exhibit a structural upswing across segments and geographies.

The residential business exhibited record performance in the fiscal with new sales bookings of Rs 7,273 crore, reflecting a Y-o-Y growth of 136%.

"So, where we sold the plots today, we started selling the floors, where we are selling the floors, tomorrow we'll be selling multi-storied apartments. This cycle is our company's perennial cycle. I think you will see it being repeated most of the time. Every time we start, we may start with a plot and walk the journey quickly. Most of the proportion going forward, we believe, will be high-rise housing," Singh said.

Singh also said that though Delhi-NCR is the major market for the company, it will expand to Chennai, Goa, Pune and Mumbai.

"We have a fair degree of stock in Chennai, both commercial and residential. So, it is an important city for us. We have a decent opportunity in Hyderabad. We have some land parcels in Pune. We have decent parcels in Goa, and we are actively engaged in dialogues in Mumbai. I think these will be three important opportunities outside the NCR," Singh said.

On future development in Mumbai through a JV model, Singh said that DLF is trying hard to find a way to make it work.

"I do feel that Bombay is a market where we can look at some incremental sales volumes, may not be immediately, but definitely in the medium term," said Singh.

"We are not really going into any new city. But we are going to complete our profitable opportunities in existing cities, "he said.

Singh believes that the Delhi market is underserved and that there is a gap between demand and supply.

"Delhi NCR is possibly the fastest growing urban agglomeration now and is forecast to be so for at least the next couple of decades. There's a lot of economic activity. There's a lot of money being generated in the city or in this region, and a lot of demand for housing," Singh said.

"The vast majority of developers, especially those of a certain size and scale in this part of the country, more so than other parts actually, have either gone out of business or chosen to go slow. So, the availability issues are certainly quite stark here, "he added.

Singh also said that the company is also looking for opportunities in Noida. DLF is not looking to pursue any opportunities in the affordable segment as it's a very construction-intensive activity.

Singh clarified that the company was getting itself ready to be in a position to do a REIT in case it wished.
"I think there is no clear finality to the decision that we are doing a REIT, this decision will be taken by both partners at the appropriate time. But we want to certainly make ourselves capable of doing a REIT in case it is possible, "Singh said.

The rising cost of raw materials will have an impact on the pricing of DLF. Singh said a five percent price hike should take care of inflation impact.

"We are looking at possibly cost inflation to the extent of, depending on the nature of our product, as it seems right now, roughly around 10% + in aggregate number, going up a little higher for products which are a bit more metal and steel intensive. We were conservative, we kept some contingency budgets in the past also," Singh said.

"But still, we may be looking at a cost increase of between five and 10%. Our product mix, fortunately, is margin rich. And therefore, that 10% of that Rs 47,000 crore should be nothing more than a number which is a couple of thousand crores, and therefore, a five-odd percent price hike should take care of the inflation impact," he added.

However, the company’s desire may still be to maintain margins, and therefore the price increase may be in the range of 7-9 percent.

"We are reasonably confident that we will maintain the margin," Singh said.

DLF also has no plan to raise equity and hopes to reach the zero-debt level soon.

DLF is India’s biggest office space operator, with about 38 million sq ft of completed offices. The company's leadership believes that office demand will be robust in the coming months.