Business Today

Real estate: Down in the pits

Hit by the slowdown and a credit crunch, once high-flying real estate projects across the country have come to an abrupt halt. If the recession gets worse, real estate could be in the pits for some time to come.Tejeesh N.S. Behl and Anusha Subramanian bring a report from the Ground Zero.

Tejeesh N.S. Behland Anusha Subramanian | Print Edition: April 5, 2009

Promised delivery in September 2007, Pavan Nagaraj saw his dream home turning into a pipe dream. The 30-year-old Bengaluru-based professional had paid Rs 29 lakh for an apartment in Ittina Abha, developed by Ittina Properties near the IT corridor.

When his queries about the status of the apartment went unanswered, Nagaraj petitioned the Consumer Disputes Redressal Commission, which, on February 20, 2009, ordered the developer to hand over the flat in three months along with interest on the money paid and costs of litigation. Till date, there are no visible signs of any activity at the project site. When contacted, Mahabaleshwarappa, Chairman, Ittina Properties, refused to answer BT’s queries.

This is not an isolated case, but one that is symptomatic of the troubles encircling the real estate sector across India as developers get hot under their collars in the ongoing meltdown.

Launched in 2006, the proposed office complex is, as yet, just another pit on the Gurgaon-Sohna Road
Vipul World Commercial
Up north, as one drives down the Gurgaon-Sohna Road in NCR, the irony of the times is unmistakable. It’s a neighbourhood littered with underconstruction projects. A year ago, they were abuzz with activity. Today, most of them are abandoned sites. Says Rajeev Talwar, Executive Director, DLF Group: “Projects which are on the drawing board will be reassessed—if there is demand, we will certainly go ahead.”

DLF, in fact, is also doing soulsearching on its retail projects. Talwar says DLF’s grandiose Mall of India in Gurgaon is having its design reworked to possibly include an office complex.

Unitech, the other major Delhibased developer, is faring no better. It has officially forbidden its employees to speak with the media. The firm’s Karma Lakelands Project, spread over 272 acres on NH 8 and offering independent villas at a starting price of Rs 6.6 crore, is currently an amalgam of unfinished houses and foundations, and the labour force is down to less than a third of the original. This is a far cry from the smug attitude many realtors flaunted not too long ago when the real estate market was booming.

As the virus spreads, realty markets across Mumbai, Chennai and Hyderabad, too, are checking into the sick bay with several stalled or go-slow projects. Points out Sanjay Dutt, CEO, Jones Lang LaSalle Meghraj: “There is at least 15 million square feet of commercial real estate blocked across Mumbai and Thane. In the retail space, we estimated that work on around 2-3 million square feet of space has been stalled while residential projects are in goslow mode.”

So, will these houses ever become homes—and will these pits see their projects to fruition? It’s a multi-crore question that real estate developers cannot answer right now. If the slowdown gets worse, real estate could be in the pits for some time to come.

Delhi NCR

Mall of India

  • Type of project: Retail
  • Developer: DLF
  • Launched in: 2005
  • Original completion date: 2009-10
  • New completion date: 2011-12

  • Reason for delay: Finalisation of design, according to the company Anybody travelling from Delhi to Gurgaon on NH 8 will find it impossible to miss this gigantic crater located just past the first toll booth on the Expressway.
Hyped as the largest mall in India, this 4 million square feet space is being developed by DLF at an estimated cost of Rs 1,500 crore. But over three years after it was kicked off, Mall of India is nowhere near completion. While the BT team found no signs of any construction activity when it visited the site recently, the company claimed that construction was very much on. In truth, the lot has remained like this for the past year-and-a-half.

There is currently a rethink within the company on the composition of the project. That is, of course, whenever it takes off.

Parsvnath Palacia
  • Type of project: Residential
  • Developer: Parsvnath
  • Launched in: April 2007
  • Original completion date: 2010
  • New completion date: N.A.

  • Reason for delay: Shortage of funds; company claims it’s on schedule From the looks of it, this seems to be a project that was abandoned before it got off the ground. Located at Plot no: 5 in Sector Pi-1 and 2 in Greater Noida, this 9.5-acre area is being developed by Parsvnath at a cost of Rs 200 crore.
Staff at the site claimed that construction for the residential project, which will house 382 units of two and three bedrooms, had been stalled, but only for two months.

However, a visit to the site by BT in November 2008 found construction had already ceased. The company claimed work would restart in March. However, this still hasn’t happened. Lack of funds is what officials on the site attributed the delay to.

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