All right, and with that let's move on to our first corporate conversation on the show. We're talking about the stars of 2024 — some of the stocks in the sectors that have done really well. One such space, obviously, is real estate. The cycle continues to be in an upswing. So what does the New Year have in store? We have Mr. Ashok Tyagi joining in, Managing Director of DLF. Mr. Tyagi, thank you for being with us. Season's greetings to you, sir. So the year was spent in recounting how many new launches you had and how they got sold in two days or three days or maybe a couple of hours. These were some very high-priced, high-end luxury launches. That was the story of 2024. Let me start with a broader view: as we get into 2025, how many years are we in the real estate upcycle already? Do you see the kind of buoyancy and appetite for high-end luxury housing continuing in 2025 as well?
Good morning, Swati. Honestly, I am not a fortune teller, and I think your question is unfair because when we were in a seven or eight years down cycle, nobody asked how long would the down cycle continue. So I think we are enjoying the ride. The entire industry, at least the organized industry, is enjoying the ride. It's been about three years since the current upcycle strengthened, and it's kept on strengthening year on year. In all fairness, if you look at it in a slightly more, I'd say, scientific manner — and I'm not an economist — I think most of the macros continue to point towards sustained growth in the real estate cycle, at least in the premium and luxury segments. We don't deal in affordable housing. Unfortunately, everything is affordable, but we don't deal in the lower end of the housing market. I'm assuming there is some degree of stress coming there for the last four quarters or so, but the premium and luxury segments continue to strengthen, not only in NCR but in Mumbai and all other urban locations that we operate in or observe.
No, Mr. Tyagi, I wasn't asking you to wear an economist hat at all. I was simply asking you that one of the first signs we see when there is — and it's a cycle, it happens every time — that there might be some exuberance building is when it's not end-user demand entirely. A lot of it starts becoming investor demand. How much of that have you seen already? Let's say, let's talk about the last quarter itself. How much would you say is end-user? How much is an element of investor, NRI demand coming through?
Okay, so we've made it public that our NRI demand is in the range of 25-27% for all new launches — almost a quarter of our sales are to the NRI segment, and this is spread across from Singapore to Dubai, London, US. As far as your issue of investor versus end-user — honestly, anybody who's buying an 8 or 10 crore house most probably already has a dwelling unit which he owns, and whether he'll move in here or not, that choice will obviously be made post-completion. What we have done is basic controls: we have hiked up our initial deposit, which we take when somebody books a house, to 50 lakh rupees against the normal of 10 or 15 lakh rupees, to ensure that the froth gets filtered out. In fact, for The Dahlias, the booking amount is 2.5 crore rupees. So I think clearly we've tried to ensure that only serious players are coming in. The stuff that we have sold in the last two and a half years, we have so far seen only a very small request for retrades or buybacks, which means that the investors or the people who have bought are clearly holding on to their purchases. But again, post-completion, I'm sure many of them will shift into these houses from their existing houses because of the better quality of life. That's something which will have to be observed. What we are not seeing, just for the record, is those early 2010 frothy times when people used to buy and trade in six months.
Point taken. Mr. Tyagi, good morning and thank you very much for joining us. A pleasure having you with us. I wanted to understand — your percentage of luxury homes has gone up. I think it's gone up for the industry itself, but yours has gone up from say 3% in 2021 to 6% in 2022 to 9% in 2023. Will that be the trend going forward as well — more in luxury — and does that mean higher margins as well for the company?
Yes. Honestly, I don't necessarily recognize those percentages that you mentioned, but clearly our focus is — at least in Gurgaon, the properties that we are selling are mostly in the 7 crore plus range. So Prana is about 7 odd crores. The Dahlias obviously is in a different price segment since it's super luxury. Our properties in the Chandigarh ecosystem, in the Tricity, are in the range of between 2.5 to 3.5 to 4 crores. Once we come to Mumbai, I think by Mumbai standards it'll be relatively premium housing and not luxury, because the price point should be in the 5 to 8 crore category. So I think those are the price points we are operating in. If you take luxury as say 5 crores plus, I think most of our sales are in the luxury segment.
Okay, so if I can persist a bit — what do you think you will do in terms of acquiring land bank, in terms of development of the land, in terms of revenue, in terms of margin? Just a ballpark, if you can tell us how the coming year will look.
Of course. Ma'am, if you see, in fact, what we've also stated in our analyst reports is that our target is to eventually hit a gross margin in the range of 45 to 50%. We are currently hovering the 37 to 40% mark, and as more and more luxury product offerings come to the market, I think we should start hitting our target margins. From a launch standpoint, clearly we continue to look at focusing in Gurgaon, including The Dahlias, which will continue to sell through the year. There'll be new phases of Prana and maybe one more project in Gurgaon. We will have the project in Mumbai, possibly the launch in Goa should also happen sometime during calendar 2025. So I think we really continue to focus on this segment.
