Sobha Ltd expecting sales cancellation of 1.93 million square feet on account of Covod19 uncertainties
New Delhi: Bengaluru-based realty player Sobha Ltd is expecting cancellation of as much as 1.93 million square feet of area already sold to property buyers. Out of this 1.93 million square feet, about 0.37 million square feet is in completed projects of the company and the rest 1.56 million square feet is in ongoing projects.
These “probabale sales cancellations” will be due to the uncertainties caused by the current corona virus pandemic. The company analyzed low or delayed collections of money from the buyers and then arrived at this probable figure. Interestingly, the realty firm has already has already given these residential properties for which it is expecting cancellation to its sales team for selling them again, Sobha said in its investors presentation recently.
The company also has unsold area, including these probable cancellations, of 16.51 million square feet currently. This 16.51 million square feet comprises of 0.62 million square feet in completed projects and 8.69 million square feet in ongoing projects. The rest of the 7.20 million square feet has not been offered for sale to buyers as yet and are in ongoing projects.
Most of the unsold houses are in the price range of Rs 1-2 crore and the company sees “major demand” for these properties which will help it in realizing cash flow faster, the company said in the presentation.
Cancellation of properties purchased just prior to the corona virus pandemic and the lockdown have become quite common and all the real estate companies are battling such a phenomenon. The cancellations are happening either due to fear of job loss in the near future among the buyers or actual terminations handed out to them by their employers in the recent past.
The real estate sentiments are at all time low and few are venturing to buy property in the current uncertain environment. The sales of residential properties have nosedived 81 percent in the April-June period of the current year as compared to the same period of 2019. Only 12,720 homes were sold in the top 7 cities of the country in the units in April-June period of the current year as against 68,600 houses in the corresponding period of 2019, according to a report by ANAROCK property consultants. The sales plummeted due to various reasons, uncertain future being one of the concerns.
Sobha’s consolidated net profit went down 56 percent to Rs 50.7 crore for the last quarter of financial year 2019-20 as against Rs 113 crore in the corresponding quarter of the previous fiscal. Its revenues from operations fell 39 percent to Rs 910 crore for the last quarter of financial year 2019-20 as against Rs 1,397 crore in the corresponding quarter of the previous fiscal.