New realty projects may not find any takers, say analysts
The Economic Times, May 4, 2009, Page 5
Prashant Mahesh MUMBAI
A LOT of new projects have been announced by real estate developers across cities like Mumbai, Delhi, Chennai and Bangalore. While there have been a large number of enquiries for these projects, those tracking the industry believe that these may not necessarily convert into transactions. This is on account of the fact that these projects scheduled to be delivered about 2-3 years from now.
Take the case of Hiranandani’s new project in Panvel (Navi Mumbai) for which possession is expected only in December 2011 or that of the Marathon Group which has launched three properties in Mulund in central Mumbai. HDIL’s properties in Mumbai’s suburbs of Andheri and Kurla are scheduled for completion by the end of 2011.
“People want to buy into completed projects, since the risk there is negligible,” says Amit Agrawal, Real Estate Analyst at Ambit Capital. Importantly, there have been enough instances in the past where developers have not kept their promise on delivery schedules.
This often results in a strain on cash flows for the potential buyer who is typically a tenant. In the past there have been enough instances, where high rise properties have been delivered after 6-7 years, thought the promised time was 2-3 years. Adds Abhisheck Lodha, director, Lodha Developers: “This normally takes place only in the case of grade-two developers where their quality could be in doubt. For reputed developers, projects across the range have been receiving the same demand,” he clarifies.
Delivery schedules could be affected based on the nature of the project, (whether it is a high rise of low rise structure) or if it is a slum rehabilitation project. The track record of the developer and the nature of the project are other factors. For instance, townships may require lot of infrastructure work which the developer may not necessarily anticipate. “Concerns over developers’ ability to complete projects which often result in a low proportion of enquires being converted into actual transactions,” says Centrum Broking in a recent report.
The Economic Times, May 4, 2009, Page 5
Prashant Mahesh MUMBAI
A LOT of new projects have been announced by real estate developers across cities like Mumbai, Delhi, Chennai and Bangalore. While there have been a large number of enquiries for these projects, those tracking the industry believe that these may not necessarily convert into transactions. This is on account of the fact that these projects scheduled to be delivered about 2-3 years from now.
Take the case of Hiranandani’s new project in Panvel (Navi Mumbai) for which possession is expected only in December 2011 or that of the Marathon Group which has launched three properties in Mulund in central Mumbai. HDIL’s properties in Mumbai’s suburbs of Andheri and Kurla are scheduled for completion by the end of 2011.
“People want to buy into completed projects, since the risk there is negligible,” says Amit Agrawal, Real Estate Analyst at Ambit Capital. Importantly, there have been enough instances in the past where developers have not kept their promise on delivery schedules.
This often results in a strain on cash flows for the potential buyer who is typically a tenant. In the past there have been enough instances, where high rise properties have been delivered after 6-7 years, thought the promised time was 2-3 years. Adds Abhisheck Lodha, director, Lodha Developers: “This normally takes place only in the case of grade-two developers where their quality could be in doubt. For reputed developers, projects across the range have been receiving the same demand,” he clarifies.
Delivery schedules could be affected based on the nature of the project, (whether it is a high rise of low rise structure) or if it is a slum rehabilitation project. The track record of the developer and the nature of the project are other factors. For instance, townships may require lot of infrastructure work which the developer may not necessarily anticipate. “Concerns over developers’ ability to complete projects which often result in a low proportion of enquires being converted into actual transactions,” says Centrum Broking in a recent report.
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