UP polls' effect on city: stalled realty projects
Several construction projects in Mumbai and its vicinity have been delayed or affected by the assembly elections in Uttar Pradesh (UP).
The last phase of the UP polls got over on March 3, with counting scheduled for March 6.
Builders in the city have been postponing their launches or have slowed down ongoing work thanks to investors in UP pulling out their funds for campaigning.
According to a leading real estate expert, more than 50 launches in the Mumbai Metropolitan Region (MMR) have been postponed due to the ongoing elections. "Most of the politicos who had invested with the builders took back a major chunk of their money for campaigning. The builders, who are already facing a liquidity crisis, had to pay back the money," he said, requesting anonymity.
A leading builder, who does not wish to be identified, said that politicians were a major source of funding for them. "Since banks loans are hard to get and there is a lack of interest among the investors, we have to depend on politicians for funds. We hope funds will flow back again now the elections are over," the builder said.
According to Sunil Mantri, chairman, Real Estate Committee (Indian Merchants Chamber), there may be some impact on construction projects due to the polls.
"As it is a high-profile election, many projects who have partners from Uttar Pradesh or have funding coming from there may have been affected," said Mantri. However, Mantri said it was difficult to gauge the number of affected projects.
In the last few years, politicians from Uttar Pradesh, Bihar, Orissa and Jharkand have invested heavily in real estate projects. The reason: Mumbai's real estate market offers a high value of appreciation compared to other places across India. "Mumbai's market offered a good opportunity to park their money," said a builder.
However, funding has been a major problem for the real estate market. According to experts, the current situation has forced builders to depend heavily on the political class to generate funds.
"Investors are no longer enthusiastic, as they see less returns. In addition to this, even private equities are not investing like they did earlier," said Pankaj Kapoor, director, Liasas Foras, a real estate research firm.