Irfan Razack, Chairman & Managing Director, Prestige Estates Projects Limited - on company's order book position & the general situation in the real estate market.
There is an increasing fear that real estate prices have gone up, demand is not there and real estate prices at least in India, they will come down...
Irfan Razack : I disagree with you. Just now, the market is extremely vibrant and sales are up. The transactions are happening at a fast pace and all sections of property are being sold starting from the ultra luxury even to the bottom of the pyramid and people are buying and committing themselves. I do not see any cause or reason to worry.
The growing concern for your sector now is that the tap of liquidity has been somewhat turned off by the government and that raising funds would now be problematic. What is your thought on that?
Irfan Razack : Actually I have a different take on this because as far as residential market is concerned, we really do not depend on bank funding. Basically if we even take a line of credit only as a backup, most of the real estate sales happen on presales and the entire projects get done on the internal accrual from the presales and that is how a whole lot of churn that happens. Where a huge funding is required certain times is when you are doing projects like SEZs or office property which you are retailing or you are into more in hospitality business.
So if you are able to probably manage your profile in terms of different segments, I see no reason why there should be any problems and moreover, banks are lending. It is not as though the banks are not lending. They are lending to good companies with good balance sheets and with proper whatever fundamentals that they see. So it is not as though somebody just switched off the tap. That is a different wrong perception.
So tell us a bit about your debt book or loan book. How much of existing loan is from PSU banks from private bodies and overseas borrowing?
Irfan Razack : No, we do not have any overseas borrowings. Our borrowings are only from the banks in India and right now after the public issue like we said earlier, we have reduced certain amount of debt and most of our debt is on rental securitisation and this rental securitisation means that we really do not have to look for additional liquidity and this loan actually gets paid off from the rental accrual that comes month on month.
What are you sensing in terms of pricing trends because the area that you operate in; there was still volume growth despite the prices being on a higher trajectory, that is the Bangalore area? Do you think that is sustainable even in the near term?
Irfan Razack : It is, one person who always believes that the prices should not go up too high too fast, that is where the trouble comes in. As far as the Bangalore area is concerned, there has been a very organic growth in prices, maybe more in line with inflation. Our prices in Bangalore probably are the lowest if you compare it anywhere else in the country except for certain luxury properties which are in the heart of the city where there is no land available but the rest of it if you just go into peripheral areas, the transactions are even as low as 2500 going up to about 4500.
(Excerpts originally appeared in The Economic Times of India)
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