New housing projects on hold in city
Mumbai: The city is unlikely to see any new housing project coming up soon as the screws turn on the property market. Last month, Mumbai’s leading developers met and discussed the possibility of not launching new residential projects considering the slowdown, sources said.
“New projects are not viable, sales are slow and buyers are sitting on the fence. Every developer is looking at his own cash flow and many projects have slowed down. Each one is wise enough to take a call on what to do,’’ said Mufatraj Munot of Kalpataru, one of the city’s oldest builders and past president of the Maharashtra chamber of housing industry. He, however, denied that builders had taken a unanimous decision not to start new projects.
But with each passing week, stagnant sales is turning up the heat on the construction industry. “Builders are deferring launching of new projects. With banks and financial institutions turning the screws, the real estate market has dried up. There are no investors and the actual users are waiting for prices to come down,’’ said a property developer, not wishing to be identified.
With their backs to the wall, a majority of builders has also started retrenching employees. Last week, a prominent developer known for his signature buildings decided to virtually halve the 450 employees on his payroll, it is learnt.
Even the once lucrative transfer of development rights (TDR) market has lost sheen. Builders used to purchase slum TDR at Rs 4,000 a sq ft till about six months ago. It is now down to Rs 1,200 a sq ft. Still, there are few takers. Moreover, builders who have bought TDR have been unable to pay sellers. It is estimated that about 100 builders owe close to Rs 200 crore to TDR owners and traders.
In the market, although builders are not officially reducing the rates of properties, they are negotiating with individual flat buyers and offering discounts to bulk purchasers. In Bhandup, a developer recently sold six flats after he reduced the price from Rs 7,500 to Rs 4,200/sq ft. In Goregaon, the builder has offered a similar reduction to six buyers.
BUILDING BLOCK
On Ghatkopar’s LBS Road, work on residential project of a prominent developer has come to a halt n Members of a housing society near Bandra’s Bhabha hospital were recently taken aback when a prominent developer from the eastern suburbs withdrew his offer to redevelop the property n Another society near Khar gymkhana received a similar withdrawal letter from a builder from the western suburbs who is said to be “neck-deep’’ in debts n A Delhi-based developer, who had won the bid for a prime mill plot in 2005, hasn’t progressed beyond the basement level in two years n A south Mumbai property redeveloper has mortgaged a high-end flat in his upcoming building to the lender from whom he has taken a Rs 9 crore loan at 39% interest n A young developer with projects in Goregaon, Virar, Thane and Juhu is reportedly in big trouble, having taken loans from Kutchi, Marwari investors at 36% interest. He is believed to have put all his projects on hold
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