India's largest real estate company wants to build fewer homes and instead focus on clearing existing inventory over the next three to four years. That's because of a change in accounting standards.
“The revenue and profits will be captured only on point of sale and not on point of construction earlier. It'll be on the delivered product,” Saurabh Chawla, executive director of the Delhi-based DLF Ltd., told BloombergQuint.
The real estate major is focusing on clearing out its inventory of ready apartments in order to better realise its revenue and margins, Chawla said.
DLF is constructing one property in New Delhi called ‘Mid-Town’. The company wants to go for a “layered” approach where it will construct new properties every three-four years. “We will improve our revenue realisation on faster delivery of flats to customers,” he said.
The market has “veered toward completed products rather than a product which is currently under construction with delivery a few years down the road,” he said.
The realty major's net profit rose 66 percent to Rs 247.73 crore in the January to March quarter despite a drop in its sales. While the financial year 2017-18 was weaker than usual on the back of the Goods and Services Tax and Real Estate Regulation Act implementation, the current financial year is expected show better results, Chawla said.