There was lot of expectation in the market that the Congress victory and decimation of TRS will drive the market up. While stock market has been booming, the real estate market has only been able to arrest further slippage.
The continuous down trend in price seen during October 08 to April 09 has been arrested. The price fall has stopped, with market expecting demand to increase. The demand increase however has been only marginal. Buyers are very few, compared to the available units, all around.
2.0 Unsold Apartments - Cause of Worry
In prime localities like Hitec City, Kondapur, Gachibowli, Nankramgua there are at least 500 stand alone units and more than 4000 gated apartment units yet to be booked. The Gated township units are distributed across Bharat, Lanco, Emmar, Ramky, NCC, Minaxi, CRK, Jains and few others.
Add to that huge combined unsold units in Gated townships in outer areas like Nallagadla, Tellapur, Miyapur, Kukatpalli etc and we do have a problem on hand. (Townships of Aparna (2), Aliens, Indu, Ashoka, Myhome, etc)
While developers hoped to get quick sales and finish off booking post elections, after couple of weeks of activity, bookings have tapered off. Primary impact will be on project delivery date in most projects.
3.0 New Apartment Project Launches - Booking Gets Stalled
Even with market in a mess, developers who were stuck with land has been trying to launch new projects. Some of these projects like DLF and Manthri, had lot of initial interest but the interest could not be sustained by the market.
Buyers are interested in reasonably completed apartment buildings and are avoiding large new projects whoever be the developer. Unlike earlier, big names have lost value whether its DLF, Ashoka, Indu, Manthri, Ambience or which ever. Buyers are not flocking to buy in large numbers, in new Projects and developers are left scratching their brains. Even offer of a Santroor Honda City do not seem to work.
Developers are facing music from landowners who would have been promised saleable units within certain time schedule. Many developers have been forced to raise funds from market at high interest rates and the delay in project take-off, is hurting them badly.
Obviously, the buyers are cautious and are aware that they could get stuck in large projects since the cash starved companies will divert cash to other pending projects, subjecting new projects to indeterminable delays.
The unfortunate fact is that there is no depth in the market. If there are 10,000 units in pipeline, we need at least a lakh of interested buyers, to see things moving fast! Till such depth is developed by way of new jobs, migration into city, job security, better sentiments, low interest rates, higher tax exemptions, things will remain damp. In effect, developers who launch new apartment projects, would just end up burning a good sum of cash.
In addition to projects that have been launched recently, we can see at least 20 large apartment projects which have been dug up and provided with barricades in Hitec City, Kondapur, Gachibowli, Lingampalli, Nallagndla, Gopanpalli, Nanakramguda etc. It will be wise for these developers to put off launch, thus saving themselves and the potential buyers, apart from other projects which are in construction.
4.0 Villa Projects are Back …BUT
Developers had said bye-bye to villas in their quest for infinite profit. (Make 25 times on same plot with multistoried buildings instead of houses). This unbridled quest to make more has been their undoing since too many high rise projects got launched in Hyderabad, which snuffed out demand.
Developers who had kept land for Highrises will now understand that their dreams have gone bad and will launch Villas.
There has been 2 new launches, recently. Legend Builders has launched "Chimes" beside Gandipet Road and Ramky has launched "Pearl" at Kukatpalli in the midst of concrete jungle. We could have expected more such launches if these projects were priced reasonably! But the rates though less compared to what it would have been if launch was 1 year ago, is no were near market capability, today.
Legend Chimes - Gandipet -320sqd, 3500sft -140Lakhs- Launched in early June
Ramky Pearl- Kukatpalli -245 sqd, 3000sft 146 Lakhs- Launched on 18 June- Need to wait to see response
Inducity -Bachupalli- 300sqd- 3100sft -160lakhs- Formal Launch - Jan 2009
Expect marginal sales and long struggle for these projects, considering the high quoted price, at those locations. To be fair to developers, may be the price quoted are not TOO high, considering the large rate per acre they might have paid on land during boom time(except Indu which bought APHB land ). But that is no consolation to buyers. Why should they foot the bill for a developer's blunder? And also subject themselves to risk arising from possible diversion of funds?
The fact that Maytas which took huge advance on Villas at Hill County, have left the buyers to great financial and delay risk has dampened sentiment. Maytas was big name.. but did they act fairly? Incidentally, Maytas has asked buyers to shell out 120 crores to complete the Project. The question buyers are asking is about the money which they paid..where has it gone? Diversion is the name of the game, in Real Estate business here.
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