Faltering at the final step
The Financial Express, May 10, 2009, Page 4
Preeti Parashar
Ashok Bansal was waiting anxiously to be a proud owner of a villa worth five crore rupees in a prestigious luxury housing project coming up in the vicinity of Chandigarh. But looking at the present realty market scenario, he is searching for prospective buyers to sell his dream home. “I took a housing loan worth one crore rupees from a bank to buy this villa. But today I am skeptical of the investment made in this property. The developer has stalled the work and the future of the project is uncertain. So there’s no other option but to sell the property,” rues Bansal.
Like Bansal many more investors who had booked luxury apartments, villas and condominiums worth anywhere between Rs 50 lakh to Rs six crore in various projects in north India and other parts of the country, are now turning to distress selling. But there are no buyers! With the fear of losing his hard earned money, a customer is ready to sell the three-bedroom apartment he booked for one crore rupees at a much lower price. “I booked this apartment for Rs one crore in Amritsar. But looking at the slow pace of development I am ready to sell it. There are other options to invest into rather than blocking such a huge sum of money,” he says.
Realty players going slow
Real estate giants like Parsvnath, Emaar MGF, Ansals and ATS Infrastructure had announced huge investment in housing as well commercial projects in Punjab, Haryana and Chandigarh region. But now these much-hyped projects seem unlikely to take off with some developers ready to withdraw investment. Zoom Developers had announced to invest upto Rs 600 crore in major cities of Punjab for constructing housing complexes, hotels and shopping malls in 2007. But so far the company has invested only Rs 30 crore.
Emaar MGF had announced an investment of Rs 16,000 crore in Mohali in Punjab, which would constitute a major portion of the company’s investment portfolio in India. But with the investors sentiments running low the development work is getting delayed in its largest integrated township — Mohali Hills to be spread across 3,000 acre in Mohali. It is learnt that the company is exploring the semi-urban and rural areas of Punjab for fresh investment in affordable as well as luxury housing projects. The step is being undertaken for incremental sales to happen via people who still are ready to invest.
Cross country effect
In Mumbai, three million square feet of commercial space has been held up while housing projects are in go-slow mode, according to Jones Lang LaSalle Meghraj. Major commercial projects like DLF Towers and Ruby Mills have also been delayed. “Work on DLF Towers, to come up over 17.5 acre in Lower Parel with an investment of over Rs 700 crore, seems to be going slow. Also Ruby Mills to be spread over 10 lakh sq ft of space in Lower Parel worth Rs 500 crore was slated to be launched in 2010, but will be extended to 2011,” says an official.
Major projects in Hyderabad hit by the economic downturn include Maytas Hill County and Lanco Hills Phase II. Lanco Infratech’s Lanco Hills phase II, with over Rs 3,500 crore investment, is awaiting its launch which has been delayed due to the present market conditions.
Chennai is also facing the heat of the downturn with various projects put on hold. As per JLLM, both residential as well commercial projects are going slow in Chennai and its suburbs. DLF’s residential project in Sholinganallur is likely to be delayed along with Mansarovar properties, which was to launch its residential project in the first quarter of this year.
Corrective measures
ATS Infrastructure has offered various options to its investors to make up for the delay of their project — Golf Meadows Prelude in Dera Bassi (Punjab), which will be delayed by six to eight months. The company has given two options to the buyers — to receive an interest of 6.5% (of the apartment cost) per annum at the time of possession or accept additional facilities. “We took this initiative to retain the credibility of the company among the investors,” says RS Bhullar, VP, ATS Infrastructure. Bhullar adds, “We will be incurring extra costs of Rs two lakh per apartment for additional fittings etc and we expect that the overall cost of Rs 100 crore will escalate by 7-10% due to the delay.”
However DLF seems to have adopted a wait and watch mode in launching its projects in Mohali, Mullanpur village near Chandigarh and Panchkula (Haryana). As per company officials, the projects will be announced in the next few months as the company is awaiting approvals for them.
On the brink of withdrawal
Parsvnath’s luxury housing project — Prideasia has been hit due to the lackadaisical attitude of the Chandigarh administration. The project’s fate is hanging in balance with an investment of over Rs 700 crore at stake. Parsvnath had bagged the project at a price of Rs 821 crore in an open auction about two years ago but has failed to pay the balance bid-amount of Rs 304 crore.
Barely 140 units out of the total 1,314 units were sold out and now around 60 investors have already opted for withdrawal of their deposits. Advisor to Parsvnath, PK Jain says, “We are not only losing out our investment but also the customer’s goodwill. Either the administration should approve our drawings or give us the desired land to continue with the project.”
The Financial Express, May 10, 2009, Page 4
Preeti Parashar
Ashok Bansal was waiting anxiously to be a proud owner of a villa worth five crore rupees in a prestigious luxury housing project coming up in the vicinity of Chandigarh. But looking at the present realty market scenario, he is searching for prospective buyers to sell his dream home. “I took a housing loan worth one crore rupees from a bank to buy this villa. But today I am skeptical of the investment made in this property. The developer has stalled the work and the future of the project is uncertain. So there’s no other option but to sell the property,” rues Bansal.
Like Bansal many more investors who had booked luxury apartments, villas and condominiums worth anywhere between Rs 50 lakh to Rs six crore in various projects in north India and other parts of the country, are now turning to distress selling. But there are no buyers! With the fear of losing his hard earned money, a customer is ready to sell the three-bedroom apartment he booked for one crore rupees at a much lower price. “I booked this apartment for Rs one crore in Amritsar. But looking at the slow pace of development I am ready to sell it. There are other options to invest into rather than blocking such a huge sum of money,” he says.
Realty players going slow
Real estate giants like Parsvnath, Emaar MGF, Ansals and ATS Infrastructure had announced huge investment in housing as well commercial projects in Punjab, Haryana and Chandigarh region. But now these much-hyped projects seem unlikely to take off with some developers ready to withdraw investment. Zoom Developers had announced to invest upto Rs 600 crore in major cities of Punjab for constructing housing complexes, hotels and shopping malls in 2007. But so far the company has invested only Rs 30 crore.
Emaar MGF had announced an investment of Rs 16,000 crore in Mohali in Punjab, which would constitute a major portion of the company’s investment portfolio in India. But with the investors sentiments running low the development work is getting delayed in its largest integrated township — Mohali Hills to be spread across 3,000 acre in Mohali. It is learnt that the company is exploring the semi-urban and rural areas of Punjab for fresh investment in affordable as well as luxury housing projects. The step is being undertaken for incremental sales to happen via people who still are ready to invest.
Cross country effect
In Mumbai, three million square feet of commercial space has been held up while housing projects are in go-slow mode, according to Jones Lang LaSalle Meghraj. Major commercial projects like DLF Towers and Ruby Mills have also been delayed. “Work on DLF Towers, to come up over 17.5 acre in Lower Parel with an investment of over Rs 700 crore, seems to be going slow. Also Ruby Mills to be spread over 10 lakh sq ft of space in Lower Parel worth Rs 500 crore was slated to be launched in 2010, but will be extended to 2011,” says an official.
Major projects in Hyderabad hit by the economic downturn include Maytas Hill County and Lanco Hills Phase II. Lanco Infratech’s Lanco Hills phase II, with over Rs 3,500 crore investment, is awaiting its launch which has been delayed due to the present market conditions.
Chennai is also facing the heat of the downturn with various projects put on hold. As per JLLM, both residential as well commercial projects are going slow in Chennai and its suburbs. DLF’s residential project in Sholinganallur is likely to be delayed along with Mansarovar properties, which was to launch its residential project in the first quarter of this year.
Corrective measures
ATS Infrastructure has offered various options to its investors to make up for the delay of their project — Golf Meadows Prelude in Dera Bassi (Punjab), which will be delayed by six to eight months. The company has given two options to the buyers — to receive an interest of 6.5% (of the apartment cost) per annum at the time of possession or accept additional facilities. “We took this initiative to retain the credibility of the company among the investors,” says RS Bhullar, VP, ATS Infrastructure. Bhullar adds, “We will be incurring extra costs of Rs two lakh per apartment for additional fittings etc and we expect that the overall cost of Rs 100 crore will escalate by 7-10% due to the delay.”
However DLF seems to have adopted a wait and watch mode in launching its projects in Mohali, Mullanpur village near Chandigarh and Panchkula (Haryana). As per company officials, the projects will be announced in the next few months as the company is awaiting approvals for them.
On the brink of withdrawal
Parsvnath’s luxury housing project — Prideasia has been hit due to the lackadaisical attitude of the Chandigarh administration. The project’s fate is hanging in balance with an investment of over Rs 700 crore at stake. Parsvnath had bagged the project at a price of Rs 821 crore in an open auction about two years ago but has failed to pay the balance bid-amount of Rs 304 crore.
Barely 140 units out of the total 1,314 units were sold out and now around 60 investors have already opted for withdrawal of their deposits. Advisor to Parsvnath, PK Jain says, “We are not only losing out our investment but also the customer’s goodwill. Either the administration should approve our drawings or give us the desired land to continue with the project.”
With investors delaying payment of installments and developers going slow, the real estate projects in the northern region are likely to miss their deadline of completion, adding on to the woes of the downtrodden industry.
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