Realty bitten by slowdown bug

Going by the steep downturn in the applications for residential and commercial projects in 2008, the countdown seems to have begun.

Against applications received for 3,038 acres for group housing in Gurgaon in 2007, the figure is a mere 403 acres in 2008. Against applications for 1,016 acres for commercial projects in 2007, the number this year has plunged to 363 acres.

While it has also to do with area available for high-rise group housing, and commercial projects under the new Gurgaon-Manesar master plan nearing their earmarked limits and most of the prime land having been taken, the spell of hectic construction activity in Gurgaon is likely to continue in the years to come.

In fact, the number of licences granted for group housing, plotted colonies, IT parks and commercial projects in the Gurgoan-Manesar belt this year itself is a whopping 134, even as some out of a total of 237 licences issued ever since the realty highpoint of 2005 have still to come on ground.

However, the demand slowdown and liquidity crisis has resulted in developers not being in a hurry to get layout and building plans approved and being content at holding on to their land banks.

8220;Developers are adopting a wait-and-watch approach. The projects may take off once the liquidity and demand scenario seems favourable,8221; says S.S. Dhillon, Director, Haryana Town and Country Planning Department, adding that the real impact of the slowdown will only manifest itself once there is no progress in projects which have been granted licences. Also, against the norm earlier, when there were a large number of smaller players in fray, it is now only the bigger ones with some resilience.

In the case of Faridabad, Haryana8217;s next realty hotspot, the boom has finally gone bust. Against 180 applications for group housing in 2007, the figure this year is just 43, while in the case of commercial projects, the number has plunged from 75 in 2007 to nil in 2008. Even in case of plotted colonies, the applications received are a mere 40 against 468 last year. Even the fate of many out of the 62 projects group housing, plotted colonies, IT parks and commercial projects granted licences in Faridabad since 2005, including 13 projects this year, now seems uncertain.

Says Rajeev Talwar, group CEO of DLF, 8220;The situation is a wake-up call and the government needs to do a lot more than what it has done so far.8221; He recommends a two-pronged approach for alleviating the current downturn in real estate. 8220;The home loan buyer has to be empowered by lowering the interest rates and the real estate developers have to be given a level playing field. All projects should at least be judged on the basis of merit.8221;