Has Lodha overtaken DLF as No 1? Skeptics abound

In a market where listed real estate majors are struggling to stay afloat and weighed down by debt, the unlisted Lodha Group is set to create a new milestone as it claims it has crossed the Rs 10,000 crore mark in net sales.

According to the real estate developer’s deputy MD Abhinandan Lodha, the group has already clocked in sales of Rs 14,500 crore in the last 18 months alone.

In fact, the Lodhas claim to have outperformed all competitors across India with net sales of Rs 8,700 crore in 2012-13, which, according to a Business Standard report, was way more than DLF’s Rs 7,772 crore.

If Lodha’s numbers are accurate, his company has overtaken DLF as India’s largest real estate developer. But there is some skepticism as Lodha is not a listed company and hence not bound by quarterly disclosure of its numbers.

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“I have serious doubts with Lodha’s numbers. My calculations show that the company has not even achieved half this target, especially at a time when there are no investors in the market, " said Pankaj Kapoor, MD, Liases Foras, a real estate consultancy.

[caption id=“attachment_737733” align=“alignleft” width=“380”]  Lodha’s Blue moon project in Mumbai[/caption]

For instance,Lodha is developing in excess of 30 million sq ft of prime real estate, with at least 27 projects in and around Mumbai, while DLF has 332 million sq ft of planned projects with 62 million sq ft of projects under construction.

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So why is Lodha making these claims, especially when there is a major glut in Mumbai’s residential market?

The company which specialises in upscale apartments for the super rich is betting on customers to bite at the top end of the market.

Three years agoLodha announced the launch of the world’s tallest residential building - World One - with over 117 storeys in Worli, in central Mumbai. This tower will house 290 apartments, 64 villas and private pools and 17 so-called mansions on its top floor with interiors by Casa/Armani.

According to Abhinandan Lodha, flats at World One are currently retailing at Rs 46,000 per sq ft. But the progress of construction has not impressed realty experts and they fear the completion deadline could be extended. This year, the group launched a mixed land-use super luxury project called The Park on the 17 acres of mill land bought from DLF in 2012 for Rs 2,275 crore.

Lodha has tied up with US-based Trump Organisation to build a tower inside the project. The 800-feet tower will comprise two or three units on each floor, with a mix of 3BHKs and 4BHKS. The price tag will be Rs 8 crore and above.

According to the BS report, Lodha claims the project has already racked up sales worth Rs 10,000 crore.

In other words, Lodha is banking on sales in the under-construction period using investor money. But at a time when there are hardly any investors left in the market and over 45 percent of Mumbai’s residential market remains unsold, how is Lodha boasting of such strong cashflows?

Lodha has attributed his success to brisk sales at projects in Dombivali and Kalyan on the outskirts of Mumbai where he is developing mid-income projects, and in central Mumbai, where he is building a mix of premium and class housing projects.

However, according to an industry insider, these projects are bound to get delayed due to a dearth of investors and high cost of interest, since most of the projects are funded via private equity money, where the interest is as high as 25 percent.

Lodha Group is promoted by Mangal Prabhat Lodha, the richest state legislator, and sons Abhisheck Lodha and Abhinandan Lodha. Mangal Prabhat is a Bharatiya Janata Party member of the Maharashtra legislative assembly.