The real estate sector in India has gone through challenging times due to demonetisation, RERA, GST etc. So to know the current trends of the residential real estate demand in Mumbai and the outlook going forward, CNBC-TV18 spoke to Abhishek Lodha, Managing Director, Lodha Developers.

Lodha Developers are one of the select multinational real estate developers with presence in India and the UK. The group has 28 ongoing projects in London, Mumbai, Pune and Hyderabad and a land bank of around 6200 acres.

Lodha said the real estate sector in India has strongly been linked to the macro economy and the real economic activity. He is very upbeat on the demand in the residential sector and expects to see a 15 percent or higher growth in net sales for them in India in FY18. In FY17, the group did Rs 6900 crore of net sales in their India business.

The demand is good for credible players with track record of delivery, said Lodha.

Although it is too early to talk about the timing of their initial public offering (IPO), it would likely be by 2018, he said.

Below is the verbatim transcript of the interview:

Reema: Real estate sector has gone through its share of challenging times whether it was demonetisation, Real Estate Regulatory Authority Act (RERA), goods and services tax (GST) etc. What is the situation on the ground? Can you tell us the kind of growth Lodha Developers will see and what does it do to your initial public offering (IPO) plans?

A: Real estate, we believe, is very strongly linked to the macro economy and the real economic activity. You may have read reports last week which showed that Mumbai had the highest level of sales in seven years last quarter and we believe that as the economy is starting to build some momentum, real estate activity especially when it comes to markets where there are reasonable number of credible players, will keep going up. Last year we did 6,900 crore of net sales in our India business and we expect that number to go up by at least 15 percent or maybe even higher this year. So we feel that the residential real estate market, especially in the Mumbai metropolitan region where significant amount of our business is based, is fairly strong. The demand is very much there but it is very much focused on credible players who have a track record of delivery and who people have seen, have the wherewithal financial and otherwise to complete their projects in a reasonable timeframe.

Latha: I am reading out the key highlights of a Knight Frank report which actually said that realty sales volumes was down 11 percent YoY and in the first half of calendar 2017 sales were the lowest in five years. Are you saying generally, I would assume Knight Frank is referring to the national market, the national market had lowest sales in five years but Mumbai market sales are very high?

A: There was a Jones Lang LaSalle (JLL) report last week which was widely reported including in most major publications which said that mumbai market quarter one was 15,800 units which is the highest ever in the last seven years. Our belief is, looking at the first six months of 2017, is a little confusing because the after effects of demonetisation prevailed in the first quarter between January to March of '17 and therefore it is not really easy to do a year-on-year comparison. Our belief on the ground and as we have seen with our company's performance, we have done over Rs 4,500 crore of net sales in the first six months of the calendar year. Our belief is that the market is not growing significantly but yes, there is strong demand and the demand is going to the large credible players.

Latha: You said 4,500 crore in the first quarter. I didn't get the number and the time and was it all in Mumbai?

A: We did 4,500 crore of net sales in our India business in the first six months that is January to June. The number was Rs 2,200 crore from April to June. So we are seeing, in the market is, sustainability in sales and this number is 15-20 percent growth year-on-year and that is what our projection for the overall year is.

Latha: Was this Rs 2,200 crore largely in Mumbai and which segment. Is it upmarket, high expensive homes? Was it like new Cuffe Parade homes? Which segment is seeing demand or sales?

A: When you look at those kinds of numbers, doing Rs 2,200 crore of net sales, what we did in one quarter was more than any other listed developer did in the whole of last year and those sales have come across the board. So the affordable housing segment is doing quite well driven by the government's incentives on Pradhan Mantri Awas Yojana (PMAY) as well as the lowering of mortgage rates but we are also seeing sales being quite strong in the middle of the market which in Mumbai is between Rs 2 crore and Rs 5 crore and at the top end we are seeing strong sales when the project is close to completion which is what we have seen in our projects at the World Tower, Lodha Altamount etc.

Reema: What are the price trends in mumbai and going back to the first question on your IPO plans? What is the progress on that?

A: It will be speculative to comment about that at this stage as we have laid out late 2016, we aim to list in 18 months from then. So we continue to think that it will be sometime in 2018 but it is too early to speculate on definitive plans for that.

Latha: What are the price trends in Mumbai?

A: Price trends have been flat in Mumbai for the last three years. We have seen some modest upward movement over the last six months but I would say that price growth in Mumbai is in the range of consumer price index (CPI) inflation which is about 3-4 percent annually and it is end-user demand which is driving the market as compared to speculated demand which is healthy for the market.