RIding High on Super Luxury Housing Push

Riding High on Super Luxury Housing Push

Vinod Behl

Making the most of its operating performance and expanding its launch pipeline with a global focus, realty major DLF is banking big on luxury and super luxury residences to achieve strong growth.

Considering the healthy performance by the company in the June quarter, its strategy is already paying dividend. DLF has posted a 23 per cent increase in its consolidated profit to Rs 645.61 crore and total income rose to Rs 1729.82 crore. New sales bookings were recorded at Rs 6404 crore, registering a robust annual growth of 214 per cent. According to Motilal Oswal Financial  Services, DLF reported a more than three-fold jump in pre-sales as it clocked bookings of INR 64 billion, largely driven by the successful launch of the second phase of Privana West, Gurgaon. The company continues to sustain momentum at its ultra-luxury project, ‘The Camellias’ in DLF 5 with bookings of   INR 2.5 billion.

With a balanced inventory of INR 30 billion, launches will thus be the key to driving its pre-sales growth. DLF aims to launch INR 420 billion worth of projects across the core markets, which will lead to 22 per cent YoY pre-sales growth in FY’25. Beyond FY’25, the company has set a project pipeline worth  INR 625 billion to be launched over 2-3 years.

Collections also spiked in 1QFY25 and almost doubled YoY to INR 30 billion. As a result, OCF surged 130 per cent YoY to INR 18 billion, which led to a surplus of INR 13 billion, post INR 4 billion of land payment. The balance sheet further got strengthened as it ended with a net cash position of INR 29 billion. Revenue came a bit softly at INR 13.6 billion, down 4 per cent YoY. While gross margin remained steady YoY at 51 per cent, EBITDA margin contracted 19pp due to an 85 percent YoY jump in other expenses on account of the big launch. PAT, including INR 3 billion of jv income increased 23 percent to INR 6.4 billion.

Rampedup Rental Income 

DLF also gained from rental income. Rental income in DLF Cyber City Developers Limited’s commercial portfolio increased 10 percent YoY to INR 11.5 billion, led by the completion of 1.3msf Downtown Chemnnai asset and 40bp rise in occupancy which led to a 10 percent YoY increase in office rental income. The retail portfolio also continued its, momentum and reported 12 percent growth in rental income. The total revenue stood at INR 15 billion. Occupancy across the non-SEZ/SEZ portfolio remained flat QoQ at 97 percent /86 percent. The retail portfolio was almost fully leased with 99 percent occupancy. Further, 3.1 MSF is under construction across existing assets in Gurgaon and Chennai and is 85 percent pre-leased including the hard option. Once delivered in 1HCY25, exit rentals are likely to rise to INR 60 billion.

Going forward, DLF is targeting to launch INR420 billion worth of projects in FY25 across all segments. The luxury project in Goa will be launched in the second quarter; Luxe 5 and the Mumbai project will be launched in 3Q and the subsequent phases of Privana in 4QFY25. According to DLF’s investor presentation, this financial year, the company has planned 3.4 MSF of launches in the super luxury segment with a sales potential of INR 27500 crore. Besides this, the real estate major has lined up 6.8 msf of launches in the luxury segment with a sales potential of INR 13500 crore. This quarter  plans are afoot to launch super luxury villas in Goa and in the 3Q25, the company plans to launch a super luxury project in Gurgaon, besides a project in Mumbai. In addition smaller project launches are lined up in Chandigarh. Also on the anvil are a few commercial launches.

According to MOFSL, the DLF management has maintained its earlier guidance of INR 170-180 billion of bookings in FY 25 . Except for the ultra-luxury project in DLF5, all the new projects are likely to follow the previous trend of monetizing a significant 80-90 percent inventory during launch. By the end of FY25, the annuity income is projected to scale up to INR 50 billion and will further grow to INR 58-60 billion in FY26, aided by the flow of rent from new assets in Gurgaon and Chennai.

Looking ahead, DLF continues to enhance its growth visibility as it replenishes its launches with the existing vast land reserves and looks forward to to 12-13-year monetization timeline for its remaining 160 MSF of land bank including TOD potential.