Bldrs tread cautiously on realty street
Nauzer Bharucha | TNN
Mumbai: Some of the tastefully done-up stalls at the property exhibition at Bandra-Kurla Complex (BKC) are as large as one-bedroom apartments. Smart marketing girls move around with glazed brochures, pitching upcoming residential projects to prospective home buyers.
In the adjoining seminar hall, there is much bonhomie among the assembled builders, gorging on a lavish vegetarian spread. To many, it may seem to be business as usual for Mumbai’s property czars. But behind the broad smiles is a growing concern about the stormy days ahead.
The construction industry is suddenly down in the dumps and builders are still unwilling to say when they will relent and reduce prices. But across the city, massive cranes, which were once swinging at frenzied pace, have slowed down considerably.
“Developers have drastically cut down work on their under-construction projects. For instance, if a builder was laying one slab a month, the pace has slowed down to one slab in three months. When flats are no longer selling as briskly as they used to, there is little point in speeding up construction work,’’ a leading builder confessed privately to this newspaper recently.
Some of them are also believed to have postponed launching new projects. Banks and financial institutions have also turned on the screws. A couple of years ago, they stopped lending money to builders for land acquisition. Now, even loans for construction has virtually come to a halt since the past three months, industry sources said. “Banks have become extremely choosy about lending money to builders,’’ they said.
In the residential segment, prices in some of the upscale projects coming up in Malad and Goregaon are in the range of Rs 9,000 to Rs 10,500 a sq ft. In Juhu, the rate is anywhere between Rs 15,000 a sq ft to Rs 21,000 a sq ft in upcoming projects. In south Mumbai, there is an eyeball to eyeball confrontation between buyers and sellers of premium apartments. “The seller is still adamant and refuses to lower the price, while the buyer is still not falling for it. In the past six months, the same flats which were put up for sale are still circulating in the market,’’ said a CEO of a real estate company, not wishing to be identified.
At Pedder Road, a builder who has just finished an upscale apartment block, is finding no takers. “He has been demanding a whopping Rs 80 crore for each apartment, which is spread over 8,000 sq ft super built up area. Not a single unit has been sold at this price,’’ said market sources.
“Confronted by a bleak scenario, builders are twiddling their thumbs and waiting for the real estate market to revive,’’ said an insider. A handful of developers who are sitting on large chunks of land since many years, and who have little exposure to banks, are in a comfortable position at present. The rest are finding the going tough while some who had purchased land at unrealistically high rates, are finding the noose tightening.
According to the market grapevine, the brother of a prominent developer from the eastern suburbs, who has branched out on his own now, is stuck after a US-based bank allegedly stopped funding his projects in Hyderabad and Chennai. Another developer with residential projects in Goregaon, Virar and Thane finds himself pushed into a corner after taking a Rs 100 crore loan from a Kutchi industrialist at hefty interest rate of over 40%.
One builder, who shook the property market last year after he paid a phenomenallyhigh price for a plot in BKC, is also believed to be now on the edge. “His investors are breathing down his neck and even the nationalised bank which funded him, now wants its money back. His desperation is now evident because he has started offering brokers a 4% brokerage for getting clients,’’ said sources.
In the commercial segment, the lease rental prices in BKC has come down from an average of Rs 450 a sq ft to Rs 325-Rs 350 a sq ft over the past three months, it is learnt. “Developers setting up IT parks are also getting worried as they are not getting the price they were expecting,’’ said a broker.
According to housing experts, about $4 billion has been pumped into the Indian real estate market by FIIs and venture capital funds. Another $12 to $14 billion was to flow in within the next 18 months. This will not come any more.
Nauzer Bharucha | TNN
Mumbai: Some of the tastefully done-up stalls at the property exhibition at Bandra-Kurla Complex (BKC) are as large as one-bedroom apartments. Smart marketing girls move around with glazed brochures, pitching upcoming residential projects to prospective home buyers.
In the adjoining seminar hall, there is much bonhomie among the assembled builders, gorging on a lavish vegetarian spread. To many, it may seem to be business as usual for Mumbai’s property czars. But behind the broad smiles is a growing concern about the stormy days ahead.
The construction industry is suddenly down in the dumps and builders are still unwilling to say when they will relent and reduce prices. But across the city, massive cranes, which were once swinging at frenzied pace, have slowed down considerably.
“Developers have drastically cut down work on their under-construction projects. For instance, if a builder was laying one slab a month, the pace has slowed down to one slab in three months. When flats are no longer selling as briskly as they used to, there is little point in speeding up construction work,’’ a leading builder confessed privately to this newspaper recently.
Some of them are also believed to have postponed launching new projects. Banks and financial institutions have also turned on the screws. A couple of years ago, they stopped lending money to builders for land acquisition. Now, even loans for construction has virtually come to a halt since the past three months, industry sources said. “Banks have become extremely choosy about lending money to builders,’’ they said.
In the residential segment, prices in some of the upscale projects coming up in Malad and Goregaon are in the range of Rs 9,000 to Rs 10,500 a sq ft. In Juhu, the rate is anywhere between Rs 15,000 a sq ft to Rs 21,000 a sq ft in upcoming projects. In south Mumbai, there is an eyeball to eyeball confrontation between buyers and sellers of premium apartments. “The seller is still adamant and refuses to lower the price, while the buyer is still not falling for it. In the past six months, the same flats which were put up for sale are still circulating in the market,’’ said a CEO of a real estate company, not wishing to be identified.
At Pedder Road, a builder who has just finished an upscale apartment block, is finding no takers. “He has been demanding a whopping Rs 80 crore for each apartment, which is spread over 8,000 sq ft super built up area. Not a single unit has been sold at this price,’’ said market sources.
“Confronted by a bleak scenario, builders are twiddling their thumbs and waiting for the real estate market to revive,’’ said an insider. A handful of developers who are sitting on large chunks of land since many years, and who have little exposure to banks, are in a comfortable position at present. The rest are finding the going tough while some who had purchased land at unrealistically high rates, are finding the noose tightening.
According to the market grapevine, the brother of a prominent developer from the eastern suburbs, who has branched out on his own now, is stuck after a US-based bank allegedly stopped funding his projects in Hyderabad and Chennai. Another developer with residential projects in Goregaon, Virar and Thane finds himself pushed into a corner after taking a Rs 100 crore loan from a Kutchi industrialist at hefty interest rate of over 40%.
One builder, who shook the property market last year after he paid a phenomenallyhigh price for a plot in BKC, is also believed to be now on the edge. “His investors are breathing down his neck and even the nationalised bank which funded him, now wants its money back. His desperation is now evident because he has started offering brokers a 4% brokerage for getting clients,’’ said sources.
In the commercial segment, the lease rental prices in BKC has come down from an average of Rs 450 a sq ft to Rs 325-Rs 350 a sq ft over the past three months, it is learnt. “Developers setting up IT parks are also getting worried as they are not getting the price they were expecting,’’ said a broker.
According to housing experts, about $4 billion has been pumped into the Indian real estate market by FIIs and venture capital funds. Another $12 to $14 billion was to flow in within the next 18 months. This will not come any more.
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