Buyers of luxury residential properties remain unaffected by rising home loan rates. DLF’s announcement of stock exchanges at The Arbor project in Gurugram is testament to the same. DLF on Thursday said it has recorded a price close to the pre-formal launch sale 8,000 crore for the luxury high-rise housing project. It consists of five towers worth 1,137 houses. 7 crore onwards per unit.
“The earnings impact from a revenue perspective from The Arbor project will come over time, but near-term cash flows will improve,” said Parikshit Kandpal, Institutional Research Analyst, HDFC Securities Ltd.
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The project marks DLF’s entry into the micro-market of Golf Course Extension in Gurugram. It is noteworthy that the company has said that more than 95% of the buyers are individuals who have bought at The Arbor for their end use. Analysts at Kotak Institutional Equities said, “We highlight that there was movement across social media and sales channels, with strong sales from the end-February project, which the company has just formally announced.”
Despite rising interest rates, the mid and premium residential categories have shown resilience with listed companies reporting strong pre-sales in recent quarters. In the nine months ended December (9MFY23), DLF saw pre-sales or advance bookings 6,599 crores. “But with pre-sales like this, the base for next year will be high, making the consistency of the sales momentum important,” Kandpal said.
Certainly, for now, it has helped the stock remain on a strong footing. DLF shares have been flat so far in calendar year 23; However, the Nifty Realty index has declined by around 8% during this period. Relatively higher exposure to the luxury housing segment is helping the stock, as well as the company’s focus on debt loans. But meaningful upside from current levels may be slow.
Analysts at Kotak say that strong sales should prompt DLF to chalk out its plan for the next phase of land monetization, which is a major catalyst for the stock performance.
Kotak’s March 16 report said, “Continued monetization of the residual land bank could add incremental value to the company – we expect to see strong activity on this front over the next few quarters.” Kotak revises fair value of DLF 430 per share 400 per share.
DLF shares closed up 4.2 per cent on Friday 375.25 on the NSE at Rs.
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