Nov. 9 (Bloomberg) -- Lodha Developers Ltd., an Indian property company that’s planning an initial share sale, expects its home sales in India will climb about threefold as a record low benchmark interest rate encourages buyers to take loans.

The Mumbai-based developer expects sales to rise to 9 million square feet by March 31, Managing Director Abhisheck Lodha, 30, said in an interview. The company, which sold 3 million to 3.5 million square feet in the previous fiscal year, has sold 4.2 million square feet in the seven months to October.

Lodha is planning a 27.9 billion rupees ($596 million) share sale as early as December to tap a revival in demand for property stocks and housing in a nation that faces an estimated shortage of 24.7 million homes. The economy, which may grow 6.5 percent in the year ending March 31, is posting “clear signs of an upturn,” Prime Minister Manmohan Singh said yesterday.

“This is by far our strongest year,” said Lodha. “Real estate is a long-term secular growth story given India’s long- term growth prospects.”

The Bombay Stock Exchange’s Realty Index has advanced 76 percent this year, surpassing a 67 percent gain in the benchmark Sensitive Index. Confidence among buyers and demand for homes has also revived, Lodha said, prompting some developers to raise home prices by up to 15 percent.

“There is no bubble, but the risk is if prices rise faster than average income growth of say 15 percent, it could decelerate demand for homes,” said Lodha. “Bubbles occur when buyers too willingly keep paying higher prices; consumers today want value for their hard-earned money.”

India’s central bank has cut a key rate by 425 basis points since October last year to help revive growth as the global economic recession threatened to slow the economy. Property prices in Mumbai declined last year following a six-year rally, according to data from Knight Frank LP in Mumbai.

State Bank of India, the nation’s largest lender, last week kept mortgage rates as low as 8 percent, helping spur demand.

The developer gets 85 percent to 90 percent of its revenue from home sales, Lodha said.

To contact the reporters on this story: Sumit Sharma in Mumbai at sumitsharma@bloomberg.net.

Last Updated: November 8, 2009 23:21 EST