Re-launches deconstructed
Hindustan Times, HT Estates, November 16, 2009, Page 1
Years ago there was a boom in the realty market and prices cracked the `reasonable' ceiling and spiralled skywards -- with no correction in sight. No matter how much an apartment cost, there always seemed to be a buyer for it. And so we saw the launch of some grand projects promising untold luxuries to buyers: Lakes, golf courses, spas... the more money you put, the grander was the lifestyle promised.
Then came the slowdown and people stopped buying -lay low and battened down the hatches.
Suddenly, `luxury' was out of style. Worried about unsold stock and about cobwebs gathering in plush apartments, many builders reworked their action plans when the `affordability' idea injected a fresh dose of life in the realty market.
"Top developers of the capital have re-launched most of their stalled projects over the last two years. Construction activity in these projects will help better consumer sentiments and have a positive effect on the market. Plus, a new opportunity opens for buyers. They can now buy into projects where possession may happen in 12-24 months and at attractive rates," says Prashant Kaura, founder and director of the real estate adviser GenReal.
The reasons There are many reasons for re-launches, says Navin Raheja, MD, Raheja Developers. "First, many developers with stock left in a particular project for the last one-and-a-half years couldn't sell because of the slowdown. Now, when the market is picking up, they will try and dispose it to get some liquidity. Secondly, some developers got extra FAR, which give them the opportunity to construct more. So, extension permission has been granted to them by the government." Pricing, too, is an issue.
"Some of the developers try to sell a project at a price which is not accepted by buyers so they (the developers) re-launch the same product in another package and at a lower price. We are also thinking of re-launching the Raheja Navodaya at Sector 92, Gurgaon. We have almost 6 lakh sq ft of space that will be up for grabs after the relaunch," adds Raheja.
A top developer examining the likelihood of re-launches is DLF. "We have got permission to increase the height (of the buildings) and so we are likely to re-launch Park Place and Belaire (in Gurgaon). We expect that it will bring 1000-plus units to the market. We believe that the re-launch phenomenon will help bring more supply.
Supply is also trickling in as demand picks up. Prices in the real estate market will stabilise not only in the primary but also in the secondary market. So, in a way, relaunches will help stabilise the prices and also revitalise the real estate sector," says Sanjay Roy, official spokesperson, DLF.
The slowdown in the real estate market affected developers who did not have the advantage of location and pricing, which DLF enjoys, says Roy. "If you have a good project in one of the best locations, your pricing is right and backed with the developer's market rapport then it will sell as there is no dearth of buyers in the market," he adds.
A number of top developers have re-launched projects in Bangalore, Mumbai and Delhi-NCR. Plans are afoot now to re-launch what used to be a swank luxury project on the Noida Expressway as an integrated township with high-rise apartments, villas and developed plots. Another luxury project in Bangalore's Electronic City is also being re-launched. Apartments there, which initially sold in the range of Rs 40 lakh to Rs 72 lakh, were re-launched and sold in the range of Rs 20 lakh to Rs 27 lakh.
Though a re-launch is not a new trend, "it is a welcome move if the demands of the old buyers are met to their satisfaction," says Raheja. "During the boom, even after repeated advice, many developers launched projects at irrational rates. Those rates would have been unviable in a booming market also -- even if there had been no slowdown. Now that the rates have rationalised, the developers have realised that they need to price the product reasonably to generate buyer interest," he adds.
The positives and negatives The re-launch of hitherto pending projects will have both positive and negative effects on the sector. "On the positive side, end-users who had booked units in these projects will finally get possession, and the fence-sitters will have a larger selection to choose from. The completion of deferred projects will increase market competitiveness and exert either a downward or stabilising pressure on rates in the applicable locations. On the downside, there is a possibility of oversupply in some locations," says Karun Varma, managing director - Bangalore, Jones Lang LaSalle Meghraj.
"However, though one expects buyers to find projects at more rational rates in good locations, it can only be hoped that the developers don't drastically reduce the quality of the product," Kaura adds.
Hindustan Times, HT Estates, November 16, 2009, Page 1
Years ago there was a boom in the realty market and prices cracked the `reasonable' ceiling and spiralled skywards -- with no correction in sight. No matter how much an apartment cost, there always seemed to be a buyer for it. And so we saw the launch of some grand projects promising untold luxuries to buyers: Lakes, golf courses, spas... the more money you put, the grander was the lifestyle promised.
Then came the slowdown and people stopped buying -lay low and battened down the hatches.
Suddenly, `luxury' was out of style. Worried about unsold stock and about cobwebs gathering in plush apartments, many builders reworked their action plans when the `affordability' idea injected a fresh dose of life in the realty market.
"Top developers of the capital have re-launched most of their stalled projects over the last two years. Construction activity in these projects will help better consumer sentiments and have a positive effect on the market. Plus, a new opportunity opens for buyers. They can now buy into projects where possession may happen in 12-24 months and at attractive rates," says Prashant Kaura, founder and director of the real estate adviser GenReal.
The reasons There are many reasons for re-launches, says Navin Raheja, MD, Raheja Developers. "First, many developers with stock left in a particular project for the last one-and-a-half years couldn't sell because of the slowdown. Now, when the market is picking up, they will try and dispose it to get some liquidity. Secondly, some developers got extra FAR, which give them the opportunity to construct more. So, extension permission has been granted to them by the government." Pricing, too, is an issue.
"Some of the developers try to sell a project at a price which is not accepted by buyers so they (the developers) re-launch the same product in another package and at a lower price. We are also thinking of re-launching the Raheja Navodaya at Sector 92, Gurgaon. We have almost 6 lakh sq ft of space that will be up for grabs after the relaunch," adds Raheja.
A top developer examining the likelihood of re-launches is DLF. "We have got permission to increase the height (of the buildings) and so we are likely to re-launch Park Place and Belaire (in Gurgaon). We expect that it will bring 1000-plus units to the market. We believe that the re-launch phenomenon will help bring more supply.
Supply is also trickling in as demand picks up. Prices in the real estate market will stabilise not only in the primary but also in the secondary market. So, in a way, relaunches will help stabilise the prices and also revitalise the real estate sector," says Sanjay Roy, official spokesperson, DLF.
The slowdown in the real estate market affected developers who did not have the advantage of location and pricing, which DLF enjoys, says Roy. "If you have a good project in one of the best locations, your pricing is right and backed with the developer's market rapport then it will sell as there is no dearth of buyers in the market," he adds.
A number of top developers have re-launched projects in Bangalore, Mumbai and Delhi-NCR. Plans are afoot now to re-launch what used to be a swank luxury project on the Noida Expressway as an integrated township with high-rise apartments, villas and developed plots. Another luxury project in Bangalore's Electronic City is also being re-launched. Apartments there, which initially sold in the range of Rs 40 lakh to Rs 72 lakh, were re-launched and sold in the range of Rs 20 lakh to Rs 27 lakh.
Though a re-launch is not a new trend, "it is a welcome move if the demands of the old buyers are met to their satisfaction," says Raheja. "During the boom, even after repeated advice, many developers launched projects at irrational rates. Those rates would have been unviable in a booming market also -- even if there had been no slowdown. Now that the rates have rationalised, the developers have realised that they need to price the product reasonably to generate buyer interest," he adds.
The positives and negatives The re-launch of hitherto pending projects will have both positive and negative effects on the sector. "On the positive side, end-users who had booked units in these projects will finally get possession, and the fence-sitters will have a larger selection to choose from. The completion of deferred projects will increase market competitiveness and exert either a downward or stabilising pressure on rates in the applicable locations. On the downside, there is a possibility of oversupply in some locations," says Karun Varma, managing director - Bangalore, Jones Lang LaSalle Meghraj.
"However, though one expects buyers to find projects at more rational rates in good locations, it can only be hoped that the developers don't drastically reduce the quality of the product," Kaura adds.
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