Reuters Summit-UPDATE 1-India's Sobha to launch 12 mln sq ft

Wed Sep 29, 2010 12:33pm IST



(For other news from the Reuters India Investment Summit, click here)

* Says implemented selective price increases

* Expects to sell 3 mln sq ft this fiscal

* Looking to expand outside its base of Bangalore

By Adveith Nair

BANGALORE, Sept 29 (Reuters) - Indian real estate firm Sobha Developers (SOBH.BO) will launch about 12 million square feet of residential projects this fiscal year and has implemented selective price increases, a top official said.

"Prices have been stable. This quarter on, there have been selective price increases on some products," Managing Director J.C. Sharma told the Reuters India Investment Summit on Wednesday.

For the April-June quarter, the company reported average realisation of 4,000 rupees per square feet, down from peak prices of 4,500 rupees in 2007.

Sharma said the company, which gets about 65 percent of its residential revenue from the southern Indian city of Bangalore, is looking to launch new projects in other cities, including in Northern India.

"This year, we hope to launch projects in the National Capital Region, Chennai and Mysore, besides launching new projects in existing locations -- Bangalore, Pune, Coimbatore and Thrissur," Sharma said.

In Northern India, Sobha will be up against established players like DLF (DLF.BO) and Unitech (UNTE.BO).

Sharma expects Bangalore's contribution to the company's overall revenue to fall below 50 percent in less than five years.

Of the targeted launches this fiscal, a majority will be outside Bangalore, Sharma said.


Sobha, which went public in 2006, is seeing higher demand from non-resident Indians (NRIs).

Demand from NRIs rose to 17 percent from less than 10 percent last year, on higher inquiries through the internet, he said.

Sobha is on track to meet its revenue growth target of 30 percent this year and achieve operating margins of 35 percent on its residential business.

After a lull in real estate demand, which saw the company sell just 2 million square feet last year, Sharma said the company expects to sell about 3 million square feet in the year to March 2011.

Sharma himself booked property in the premium Sobha Ruby project in Bangalore recently.

Shares of the company were up 1 percent at 393.8 rupees Wednesday afternoon on the Bombay Stock Exchange.

The stock is up 15 percent since it reported strong results in July, outperforming a 7 percent rise in the sector index .BSEREAL. (For more on the Reuters India Investment Summit, see [ID:nSGE68Q05E]) (Additional reporting by Archana Shankar and Mihir Dalal in Bangalore; Editing by Prem Udayabhanu)

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