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No festive fizz in realty deals

india Updated: Oct 18, 2012 22:26 IST
Sachin Dave

Waiting to buy your dream home around Diwali in anticipation of festival incentives? You may be in for some bad news. Real estate developers are not planning many launches this time around.

There is likely to be a substantial fall in the number of projects launched this year against 2010 and 2011, say industry experts. The Mumbai Metropolitan Region and the National Capital Region witnessed around 400 small and big projects launches around Diwali in 2011, which is expected to be halved in 2012.

Most developers are already sitting on unsold inventory and are experiencing cash flow issues. "In the top four metros, real estate projects are in a need of around Rs 36,000 crore in cash flows, excluding the land cost," said Pankaj Kapoor, managing director, Liases Foras. "Cash flows can only improve if prices are corrected but developers are abstaining from that."

And with such huge inventories on their books, developers are more likely to abstain from launching new projects, say industry experts. According to a report by Knight Frank, there are 80,000 unsold flats in the MMR worth Rs 1 lakh crore. "It does not make sense to put new inventory in the market when you are unable to sell off the old one," said a senior executive with a public listed realtor. "Many developers try to pass on old stocks or new phase of old projects as new launches during the festive season."

Also, most projects that would be launched are expected to be in the luxury category. Luxury projects have been doing better comparatively. Mumbai-based Lodha Developer that recently launched project Lodha Evoq in the Wadala area, is planning to launch another project around the festive season. "We are going to do a launch (of a project) around Dussehra in Central Mumbai and will follow up with other launches by the end of the year," said Abhisheck Lodha, managing director, Lodha Group.