Venkatesh Gopalakrishnan CEO, Shapoorji Pallonji Real Estate
Venkatesh Gopalakrishnan, chief executive at Shapoorji Pallonji
Real Estate, tells Raghavendra Kamath that the Covid-19 crisis is expected to accelerate consolidation among realty players. However, he says the company will ride out the crisis, and that there will be no job or salary cuts at the firm. Edited excerpts:
How has the lockdown impacted your business?
Sales is not zero. Since April we have sold over 100 apartments, which is 25-30 per cent of what we do usually. Normally, we sell 150-200 apartments in sustenance sales (sales from existing projects) but are now selling 50. Sales are slowly picking up. It will take 3-6 months for us to understand that how things will pan out. We hope to achieve 60-70 per cent of our sales capacity in six months.
What kind of reduction do you anticipate in sales this year?
We expect 35-40 per cent decline in sales. But, we will also manage costs appropriately. Costs will come down by 35-40 per cent. Indirect costs such as electricity, administration, and outsourcing will come down by one third. Direct costs will also come down. But we have not cut any jobs. We will also not go for any major cuts in salaries.
Are you looking to tweak apartment sizes/pricing to suit the new normal?
We will try to introduce more three bedroom apartments. People who will continue to work from home would want to have one room as office. Today, 50-60 per cent of our residential portfolio is two bedrooms and 20-25 per cent is three. The share of three bedrooms will go up by 5 per cent. We have been keeping right pricing to generate sales velocity, which is 2-3 per cent lower than the market.
How are you managing your finances?
We have been able to manage the liquidity well, given that costs are going down and banks are supporting us. In May, we will take moratorium selectively on our repayments as we have to fund projects.
How are you leveraging technology to drive sales?
We have launched our digital platform ‘Virturo’ to provide a seamless buying experience. This platform puts a sales representative in the ‘driver’s seat’ and equips him with key information like location USP, Google Street View, sample flat photographs, and other project-related information under one roof. Our aim is to provide an actual site visit experience to the prospect customers on our virtual platform itself.
How far the Covid-19 issue will prolong the slowdown in the real estate sector?
Demand was not bad for corporate developers in the past two years. It will take six months for things to look up. We have eight to nine launches. I think second half of this financial year will be conducive for launches. But we have to assess the situation before that.
Consolidation in realty has been happening in the past 18 months. It will accelerate. Liquidation is tight for small and medium players and buyers will buy from Grade-A developers. Residential demand will come back in the medium term due to falling interest rates, pick up in economy, and pent up demand for properties.
How are you handling labour issues?
group has been taking care of more than 100,000 workers at our project sites during these challenging times. We are providing rations, carrying out health check-ups on a daily basis, and have created quarantine rooms to handle any suspect cases. The adequacy of the arrangements is being reviewed daily and actions taken to mitigate risks.