Hit by slowing housing demand and a severe liquidity crunch, real estate companies are scrambling to defer their projects, especially in and around metros.
In Gurgaon, several projects of developers, including DLF Ltd, Unitech Ltd and Parsvnath Developers Ltd, are now delayed by at least six months.
Unitech’s Fresco in Gurgaon, which was scheduled for completion by December is now expected to be completed only by December 2009. The company’s The Close project in Gurgaon, which was also to be completed by December, will now be delivered in the second quarter of 2009.
Phase One of the company’s Unitech Grande project, the super-luxury residential project in Noida, is also delayed by at least six months. It is expected to be delivered by July 2010, according to analysts and consultants.
Parsvnath’s Exotica project in Gurgaon has been delayed by three-four months and is expected to be delivered in the second quarter of 2009. According to a Parsvnath executive who didn’t want to be named, the first phase of the project will be delivered by March and the entire project will be completed by the first quarter of 2011.
“Initially, the delay was because of approvals required for projects at various stages, shortage of manpower and poor project management skills,” said an analyst with a brokerage firm who didn’t want to be identified, referring to the industry as a whole. “From there on it has become a question of liquidity.”
DLF’s Pinnacle, which was meant to have been ready in the second quarter of 2008, will now be completed in the first quarter of 2009, according to consultants. Another project, DLF Icon was to be delivered in the second quarter of 2008 but will now be handed over in the first quarter of 2009.
DLF and Unitech didn’t respond to emails seeking comments on the specific projects.
According to DLF’s website, the building structure of DLF Pinnacle is complete and for DLF Icon, while the building and club structure is complete, work is in progress on internal finishing and common areas.
Earlier this week, at the India Economic Summit of the World Economic Forum, DLF chairman K.P. Singh said some of the company residential, commercial and hotel projects have been delayed because of a slump in real estate demand and the liquidity crunch.
“Demand has gone down so substantially that projects are being shut down across the country.,” he had said on the sidelines of the summit.
The cash crunch is having a knock-on effect as well. A Bangalore property consultancy firm said on condition of anonymity that bookings stopped soon after a luxury villa project in Whitefield, on the city’s outskirts, got stuck midway because of liquidity problems.
“The developer immediately slashed prices from Rs4,600 per sq. ft to Rs3,700-3,800 per sq ft and informed the brokers. As soon as he manages to raise some money, he will continue the project, which had a January 2009 deadline,” said the consultant, who didn’t name the company because he works closely with it.
The delay is not limited to residential projects alone. Developers have also put their mall and hotel projects on hold.