Builders forced to pay with their flats

Last week, another builder handed over the key of a flat at his Mira Road site to a real estate magazine. He had advertised for the sale of his apartments for over two years and piled on his arrears to the publication since his property was not getting sold.

The editor of the magazine, who did not want to be named, said, “We gave the builder a pretty long time to pay up without pressurising. Seeing no easier way to pay for the ads, he came up with this proposition. We were left with little choice but to accept the offer.”

Pressure, however, was quite hard on another developer from Santacruz. He swapped the entire second floor of his shopping mall with a non-resident Indian, who helped with cash to tide over his recent financial crisis. He wanted to pay the interest on the loan, which was escalating at an alarming rate.

“I borrowed money to invest when returns from real estate were high. There was absolutely no sale during the last one-and-half year,” he lamented.

Murari Chaturvedi, editor, Accommodation Times, said the reasons are not far to seek. “The accommodation industry is caught in a vicious circle of no money-no progress-no sale. There has been almost no construction in the city in the last 18 months. This is likely to continue till 1998-end. Real estate prices are likely to start picking up sometime before next Diwali and boom in 1999.”

Though there is an annual demand of 80,000 new housing units in the city, less than 32,000 units were built in 1995. With almost no new flats built during 1996-97, what are being sold now are only ready-made flats. The demand for flats built by reliable builders will outstrip supply by the end of 1998, resulting in demand for flats in the following years, added Chaturvedi.

Speaking to Express Newsline, Maharashtra Chamber of Housing Industry secretary Mohan Deshmukh admitted that sale of property has declined significantly in the last one-and-half-year. “This has more to do with the economy of the country. However, there are some healthy signs. The market beyond Andheri is stirring. Sale of flats will gradually pick up in the next 3-4 months,” he predicted.

Observers in the accommodation industry felt that most of the swapping have taken place in the distant suburban stretch like Jogeshwari-Virar in the west and Thane-Badlapur in the northern suburbs, where most of the newly-constructed buildings are found.