The COVID-19 pandemic has proved to be a bane for most businesses but not the Signature Global Group. The leading affordable housing player in the national capital region market, has recorded unprecedented spurt in its sales since the pandemic started. Its founder and chairman Pradeep Aggarwal tells Business Today in an exclusive interaction, how the pandemic proved to be a boon for the residential market driving back homebuyers, who had been avoiding home purchases for nearly a decade. Edited excerpts:
BT: What has been the overall impact of the COVID-19 pandemic so far? With the pandemic now entering the third year, do you see any course correction?
Pradeep Aggarwal: The market dynamics have changed significantly since the first COVID-19 wave. Initially it was anticipated that the market would suffer due to job losses and cut in income levels of a large section of the population. But probably, that’s when it had touched the nadir and the only way it could have headed is upwards.
In fact, the first wave in 2020 arrived as a blessing in disguise. It acted as a trigger that was long awaited. As soon as unlocking started, in mid-2020, the transformation begun. While for years occupiers were staying away from the market and it was the investors that were mostly purchasing homes, homebuyers with intent to actually reside in the units came back in the market. This is the reason why we are now observing well over 50 per cent jump in both sales and new launches since. I expect this trend to continue boosting the market till 2030.
BT: You really think that the recent spurt in demand would continue that long? How?
PA: The yield in real estate sector has been 2-3 per cent per annum for nearly a decade, in comparison to 6-12 per cent in other asset classes. Resultantly, potential homebuyers used to prefer staying at rented places in stead of putting their money in a low yield sector. But the COVID-19 pandemic initiated a behavioural change among consumers - making them realise the importance of staying in their own homes. This played a key role in the recent spurt in activities in the residential segment.
BT: Has the demand uptick helped Signature Global’s business?
PA: The trend has immensely helped our business. In FY21, we recorded highest sales in our company’s history. And in FY22, we are set to overtake last year’s sales. From Rs 1,150 crore of sales in FY19-20, our sales grew by 60 per cent to Rs 1,900 crore in FY20-21. So far in FY21-22, we are already touching last year’s numbers and expect to end the year with Rs 3,000 crore of sales.
In FY21, we had delivered well over 2,500 affordable units and this year we are going to deliver 5,000-6,000 units. In FY22, under the affordable housing scheme and Deen Dayal Away Yojana (Haryana Govt scheme for developers floors), we are launching 11,000-12,000 units.
BT: The overall inflation scenario is impacting every household. What has been the impact on the residential sector?
PA: It’s natural that the overall inflation is impacting purchasing power of households. But thankfully, so far we haven’t noticed any significant impact on the real estate sector, which has already gained momentum. Since 2019, overall costs have gone up by 30 per cent. Key raw materials like cement costs have spiked by 50 per cent, while for steel it has jumped by 80 per cent. Other materials and labour costs have also gone up by 25-30 per cent, on an average.
As a result, prices of new launches have also gone up by 10-20 per cent since 2020. In the affordable housing segment, the government has also raised the cap by 7-8 per cent due to rising costs. In coming months, the impact of inflation may become visible in the sector but I don’t expect it to become a major challenge.
BT: Given the growing importance of the Noida-Jewar region, are you now looking to venture in the market?
PA: We have been focusing on the Gurugram-Sohna region (in Haryana) because of its surging importance due to construction of the Delhi-Mumbai E-way and freight corridor. The Noida-Greater Noida region is fast emerging as the hotbed of activities due to the upcoming Jewar airport. It is also an area that we feel needs more attention of the developers. The region is our next focus market. Wide spread interest among buyers have led to a surge in land prices in the region. So we are waiting for the prices to cool off a bit.
Also read: Real Estate: Housing sales grew 51% in 2021
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