Indian development company DLF is to defer the development of its “luxury homes and retail space” and focus on “mid-income homes and commercial complexes” in response to diminishing demand from buyers.
In its fourth quarter results, DLF said it expected demand in the luxury homes and retail sectors in India to fall further and for prices to continue to drop.
Rajiv Singh, DLF vice chairman, said in a statement: “The present situation is very different from the boom that we had been seeing in the past few years. The real estate industry has moved from a period of abundant capital availability to times of liquidity crisis. The current economic environment has affected sentiments at a macro level, with demand from both home buyers as well as corporates being affected.”
In its results to the end of December 2008, DLF said its revenues had fallen by more than half from the previous three months.
Singh said: “Looking at the situation, we will continue to follow a cautious approach and focus on completion of existing projects within defined time limits. Our focus will be on the mid-income homes and commercial complexes, with deferment of high-margin launches in luxury homes and retail space.”
Singh said that DLF had met all its current financial commitments and is in the process of substituting short-term debt with asset-based long-term debt.
In its statement, DLF also said its asset management business, DLF Asset Limited, had “received a serious level of interest from large private equity investors,” and that a deal for the business could close soon. But it warned that due to the slowing demand for leased office space, attractive revenues for the business would “not be significant at least for the next several quarters”.