Realtors seek to barter houses against bills, find no takers
The Economic Times, April 3, 2009, Page 9
Sanjeev Choudhary, ET Bureau
NEW DELHI: Caught between a credit squeeze and demand crunch, realty players want to barter houses to settle pending supplier bills, but contractors say they can’t forego hard cash and settle for flats in a falling property market.
At least three major realty brands operating in the national capital region have offered apartments in their ongoing projects to contractors and suppliers of building material, industry insiders told ET. “There are several real estate companies that are falling behind on payments and asking contractors to settle for apartments instead,” says PR Swarup, director general of Construction Industry Development Council. Swarup refuses to name any company, but ET has learnt the firms taking this route include even listed players.
A Delhi-based realty firm, a prominent name in the sector, is developing a major residential project in the city and has offered apartments to its contractors. “We have made an offer but the contractor is asking for a discount. If we reduce apartment prices, we will also expect the contractor to bring down the bill value for the work he has done on our project,” says a company executive corroborating this.
Another Delhi-based listed mid-size developer and a highly-leveraged Gurgaonbased listed real estate company too have offered to sell their apartments to their contractors and building material suppliers to settle dues.
This enthusiasm doesn’t have many takers at the other end. “Even if we were to take apartments, they will have to be sold someday to generate revenue. If developers can’t sell these homes, how can we do it?” asks Arun Sahai, CEO of Ahluwalia Contracts, which has been offered houses in a major project in Delhi. Ahluwalia Contracts, a Rs 1200-crore Delhi-based listed construction company, is currently engaged in the execution of several residential projects, including the prestigious Commonwealth Games Village. “Barter will not help. We are focused on construction and without a regular cashflow, our work will get stalled,” says Mr Sahai.
Shailendra Chouksey, director, JK Lakshmi Cement, says his company has become more choosy in supplying cement and ready-mix concrete to builders these days, given the delay in payments. “Builders are under pressure. Most of them have been delaying payments,” he says.
Real estate sector has been under pressure for almost a year because of dramatic decline in sales, credit crunch and unavailability of private equity. Extraordinarily high prices together with high financing cost have made houses unaffordable for home buyers. An economic downturn has further weakened sentiments in the housing market with several existing and potential home buyers suffering or facing the threat of job and salary cuts.
The Economic Times, April 3, 2009, Page 9
Sanjeev Choudhary, ET Bureau
NEW DELHI: Caught between a credit squeeze and demand crunch, realty players want to barter houses to settle pending supplier bills, but contractors say they can’t forego hard cash and settle for flats in a falling property market.
At least three major realty brands operating in the national capital region have offered apartments in their ongoing projects to contractors and suppliers of building material, industry insiders told ET. “There are several real estate companies that are falling behind on payments and asking contractors to settle for apartments instead,” says PR Swarup, director general of Construction Industry Development Council. Swarup refuses to name any company, but ET has learnt the firms taking this route include even listed players.
A Delhi-based realty firm, a prominent name in the sector, is developing a major residential project in the city and has offered apartments to its contractors. “We have made an offer but the contractor is asking for a discount. If we reduce apartment prices, we will also expect the contractor to bring down the bill value for the work he has done on our project,” says a company executive corroborating this.
Another Delhi-based listed mid-size developer and a highly-leveraged Gurgaonbased listed real estate company too have offered to sell their apartments to their contractors and building material suppliers to settle dues.
This enthusiasm doesn’t have many takers at the other end. “Even if we were to take apartments, they will have to be sold someday to generate revenue. If developers can’t sell these homes, how can we do it?” asks Arun Sahai, CEO of Ahluwalia Contracts, which has been offered houses in a major project in Delhi. Ahluwalia Contracts, a Rs 1200-crore Delhi-based listed construction company, is currently engaged in the execution of several residential projects, including the prestigious Commonwealth Games Village. “Barter will not help. We are focused on construction and without a regular cashflow, our work will get stalled,” says Mr Sahai.
Shailendra Chouksey, director, JK Lakshmi Cement, says his company has become more choosy in supplying cement and ready-mix concrete to builders these days, given the delay in payments. “Builders are under pressure. Most of them have been delaying payments,” he says.
Real estate sector has been under pressure for almost a year because of dramatic decline in sales, credit crunch and unavailability of private equity. Extraordinarily high prices together with high financing cost have made houses unaffordable for home buyers. An economic downturn has further weakened sentiments in the housing market with several existing and potential home buyers suffering or facing the threat of job and salary cuts.
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1 comment:
Some more reasons to use barter
Save Cash
Realise full market value for non-recoverable, non-recyclable, limited commodities or otherwise unsold stock or time.
Access interest free credit and repay borrowings with new sales.
Increase Your Asset Base
Buy at a discount of up to 90%.
Invest in other businesses without the need for cash.
Increase Your Financial Liquidity
Convert existing bad debts to assets.
Pay existing creditors from new sales.
Convert equity from slow moving inventory or unsold appointment time.
Attract New Cash Paying Customers
Access innovative ways to new cash contract tenders.
Build Your Brand
Build a community network around your brand.
Expand distribution channels and market reach.
Align your business with charities and community enterprises.
Gain repeat business and take customers away from the competition.
Improve your social standing, customer and staff loyalty.
Create local business opportunities within your community.
Retain Staff and Customers
Create customer loyalty programmes.
Provide staff incentives.
Implement a staff donation/giving programme.
Pay for client entertainment.
Become More Efficient
Substitute imports with higher quality, locally provided goods or services at wholesale price.
Decrease wastage and develop new consumer habits.
Get more out of your employees with employee rewards and buying programmes
Take overstocked, last season or end-of-line items off-market while earning full retail value.
There is a good history of Barter at Ormita Commerce Network website i saw. Its under "About Us" then "History of Barter".
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