City-based realtors stay away from new projects

The slowdown in Ahmedabad's real estate market seems to have worsened with developers refusing to take up any new projects. Forced by acute cash crunch and dwindling buyers, developers in the city have virtually stopped buying new land for future projects. "Raw material prices have risen by anywhere between 15 per cent and 60 per cent. Add to that, the real estate market has been witnessing a slowdown since sometime. This has discouraged developers to take up any new projects," says Rajesh Vaswani, executive director of city-based Venus Infrastructure & Developers Ltd. Needless to say, as against an average 8-10 projects, Venus Infra is currently handling just six. "There is an acute cash crunch among developers. Hence, investing in new projects is out of question for now. We are wary if the returns will be there or not. Which is why, we have foregone 2-3 projects and stuck to handling just six of them," adds Vaswani. Seconding his views is Jaxay Shah, director, Savvy Infrastructure Ltd., who currently has projects like Savvy Solaris, Savvy Shapath Hexa, Savvy Swaraj and Kensville on hand and flatly refused to take up any new projects. According to Shah, residential projects with ticket prices of upto Rs 40-60 lakh are seeing some movement, while business has slowed down drastically in below Rs 40 lakh and above Rs 60 lakh. "Both buyers as well as investors have been shying away from the market. Demand for even commercial properties above 1,000 sq ft size has gone down drastically. At such times, we are not sure of returns if we lock our money in new projects. In fact, in the whole of Ahmedabad market, projects where land has been bought in last 2-3 years only have been running on while no new lands are being bought by developers," says Shah, adding that Savvy as well is not willing to buy fresh land for new projects. Moreover, experts suggest the scenario may continue till the end of the fiscal. "Buyers are expecting potential rise in rebates in housing loans. Once the budget gets through, we might see certain movement in property buying by April. If that happens, liquidity might start flowing again in the market, thereby initiating new projects. Till then, developers are restricting projects on hand," says Vijay Shah, another city-based developer. Meanwhile, industry players are doubtful if continue slowdown will result in price correction. "Raw materials including steel and cement have risen acutely. Hence, it is not viable for developers to forgo further margins by correcting prices," adds Vaswani. Source: http://www.business-standard.com/india/news/city-based-realtors-stay-awaynew-projects/466926/