Real estate: Down in the pits

Promised delivery in September 2007, Pavan Nagaraj saw his dream home turning into a pipe dream. The 30-year-old Bengaluru-based professional had paid Rs 29 lakh for an apartment in Ittina Abha, developed by Ittina Properties near the IT corridor.

When his queries about the status of the apartment went unanswered, Nagaraj petitioned the Consumer Disputes Redressal Commission, which, on February 20, 2009, ordered the developer to hand over the flat in three months along with interest on the money paid and costs of litigation. Till date, there are no visible signs of any activity at the project site. When contacted, Mahabaleshwarappa, Chairman, Ittina Properties, refused to answer BT’s queries.

This is not an isolated case, but one that is symptomatic of the troubles encircling the real estate sector across India as developers get hot under their collars in the ongoing meltdown.

Up north, as one drives down the Gurgaon-Sohna Road in NCR, the irony of the times is unmistakable. It’s a neighbourhood littered with underconstruction projects. A year ago, they were abuzz with activity. Today, most of them are abandoned sites. Says Rajeev Talwar, Executive Director, DLF Group: “Projects which are on the drawing board will be reassessed—if there is demand, we will certainly go ahead.”

DLF, in fact, is also doing soulsearching on its retail projects. Talwar says DLF’s grandiose Mall of India in Gurgaon is having its design reworked to possibly include an office complex.

Unitech, the other major Delhibased developer, is faring no better. It has officially forbidden its employees to speak with the media. The firm’s Karma Lakelands Project, spread over 272 acres on NH 8 and offering independent villas at a starting price of Rs 6.6 crore, is currently an amalgam of unfinished houses and foundations, and the labour force is down to less than a third of the original. This is a far cry from the smug attitude many realtors flaunted not too long ago when the real estate market was booming.

As the virus spreads, realty markets across Mumbai, Chennai and Hyderabad, too, are checking into the sick bay with several stalled or go-slow projects. Points out Sanjay Dutt, CEO, Jones Lang LaSalle Meghraj: “There is at least 15 million square feet of commercial real estate blocked across Mumbai and Thane. In the retail space, we estimated that work on around 2-3 million square feet of space has been stalled while residential projects are in goslow mode.”

So, will these houses ever become homes—and will these pits see their projects to fruition? It’s a multi-crore question that real estate developers cannot answer right now. If the slowdown gets worse, real estate could be in the pits for some time to come.


Delhi NCR

Mall of India

• Type of project: Retail

• Developer: DLF

• Launched in: 2005

• Original completion date: 2009-10

• New completion date: 2011-12
  
  
• Reason for delay: Finalisation of design, according to the company Anybody travelling from Delhi to Gurgaon on NH 8 will find it impossible to miss this gigantic crater located just past the first toll booth on the Expressway.
  

Hyped as the largest mall in India, this 4 million square feet space is being developed by DLF at an estimated cost of Rs 1,500 crore. But over three years after it was kicked off, Mall of India is nowhere near completion. While the BT team found no signs of any construction activity when it visited the site recently, the company claimed that construction was very much on. In truth, the lot has remained like this for the past year-and-a-half.

There is currently a rethink within the company on the composition of the project. That is, of course, whenever it takes off.

Parsvnath Palacia

• Type of project: Residential

• Developer: Parsvnath

• Launched in: April 2007

• Original completion date: 2010

• New completion date: N.A.
  
  
• Reason for delay: Shortage of funds; company claims it’s on schedule From the looks of it, this seems to be a project that was abandoned before it got off the ground. Located at Plot no: 5 in Sector Pi-1 and 2 in Greater Noida, this 9.5-acre area is being developed by Parsvnath at a cost of Rs 200 crore.
  

Staff at the site claimed that construction for the residential project, which will house 382 units of two and three bedrooms, had been stalled, but only for two months.

However, a visit to the site by BT in November 2008 found construction had already ceased. The company claimed work would restart in March. However, this still hasn’t happened. Lack of funds is what officials on the site attributed the delay to.

Unitech Grande

Unitech Grande

• Type of project: Residential

• Developer: Unitech

• Launched in: July 2007

• Original completion date: 2010 (first phase of 422 apartments)
  

• New completion date: 2012
  
  
• Reason for delay: Financial crisis Unitech’s brochure quotes Jonathan Swift, who once said: “Vision is the art of seeing things invisible”—a rather prescient quote, considering their current flagship project has made no headway. According to the company’s site office, digging work for seven towers out of a possible 45 is complete, though the BT team could find no evidence to support this claim.

The site office maintains that the project is only slightly delayed— with the completion of the first phase now scheduled for early 2012. The company’s external communications agency pleaded a media gag due to a “bit of a crisis”.


Mumbai

DLF Towers A, B and C

• Type of project: Retail-cum-IT park

• Developer: DLF

• Launched in: 2005

• Original completion date: 2011

• New completion date: Uncertain
  
  
• Reason for delay: Change in the original plan
  

In 2005, realty major DLF acquired Mumbai Textile, a defunct National Textile Corporation (NTC) mill, for an astounding Rs 702 crore. Now, three years on, there is no work happening on this massive 17.5 acre area in Lower Parel. Rajeev Talwar, Executive Director, DLF says: “We are going to develop this property as a high-end commercial and retail project and if we give any timeline, it would be very speculative. The plans have changed to include retail with commercial office space.”

DB Tower

DB Tower

• Type of project: Hotel-cumresidential

• Developer: DB Realty

• Launched in: 2008

• Original completion date: 2011

• New completion date: N.A.

• Reason for delay: Company officials claim no delay (work is ongoing) With a built-up space of 9 lakh square feet, and a panoramic view of the Arabian Sea, Neelkamal Realtors (a part of DB Realty Group) is coming up with a 75-storey hotel-cum-residential tower in Charni Road.

The building, scheduled to be completed in 2011, is expected to cost Rs 1,100 crore, and will be managed by Park Hyatt. According to a company spokeswoman: “The site work is going on.” However, a visit to the site shows that the ground has only been excavated and there is no construction activity yet.

The group is also coming up with a second project—Orchid Ozone Mall in Dahisar and this, too, is delayed. The mall, being built on 2.5 million square feet of land at a cost of Rs 700 crore is far from being complete. The reason? “The project is being re-planned with residential development being introduced,” says a company spokesperson. Bengaluru

DLF Garden City

Ittina Abha

• Type of project: Residential

• Developer: Ittina Properties

• Launched in: 2006

• Original completion date: September 2007
  

• New completion date: N.A.

• Reason for delay: Funds shortage The project promised delivery to most flat owners by September 2007. But many, like Pavan Nagaraj who had paid Rs 29 lakh for a flat in Ittina Abha, were left emptyhanded as construction was delayed. The group is developing this project at Marathahalli in Bangalore on 2 acres of land. When BT visited the project site in February, there were still no signs of construction activity. Ittina Chairman Mahabaleshwarappa was not reachable for his comments.

The Nectar

• Type of project: Residential

• Developer: Astha Infrastructure

• Launched in: 2006

• Original completion date: 2007

• New completion date: June 2009

• Reason for delay: Funds shortage The Consumer Commission had to step in to help a buyer get his money back after this project was stalled for over a year. Astha’s Director Rajesh Keerthi says that the project suffered on account of funding issues but would now be complete in four months.“We will give flats to people who wait and give refunds to those who opt out,” he said.

Chennai

Lanco Hills Phase II

DLF Garden City

• Type of project: Residential

• Developer: DLF Southern Homes

• Launched in: April 2008

• Original completion date: 2012

• New completion date: Likelihood of a delay

• Reason for delay: Approvals not obtained

The entire project encompassing 32 multi-storey buildings with 19 floors and other amenities such as a school, mini-hospital, mini-mall and a clubhouse is delayed. The project, located on Semmanchery in Old Mahabalipuram Road is being built on 53.5 acres of land.

DLF points to hold-ups in getting approval from local authorities for the delay. However, the company has not yet completed a buyer’s agreement with future occupants—though they gave the company advances worth Rs 100 crore a year ago. There have been a number of cancellations from irate buyers.

Riverside Mall

• Type of project: Retail

• Developer: Marg Constructions

• Launched in: October 2007

• Original completion date: 2008

• New completion date: 2010

• Reason for delay: Awaiting Chennai’s second master plan The company says that the project is on and retailers would come in once the anchor store— a hypermarket—is brought in. Whether the delay is purely because plans were not being approved, or whether it was because the retail market has been faring badly is difficult to say.

Marg is not revealing names of clients who have supposedly evinced interest in the space, but says that the mall will “have a pragmatic appeal to buyers wanting value, as in the case of affordable housing buyers.’’ The project promises a mall covering 6 lakh square feet with space to park 2,000 cars. The estimated cost is around Rs 361 crore.


Hyderabad

Ittina Abha

Lanco Hills Phase II

• Type of project: Mostly offices and a few residential towers

• Developer: Lanco Group’s real estate arm
  
  
• Launched in: Phase II was to be launched now, but its commencement is linked to market conditions Completion date: Phase I in 2010 (on schedule).
  

Phase II uncertain Coming up at Manikonda, this Rs 3,500 crore project is one of Hyderabad’s biggest in recent years. However, the downturn has affected its fortunes.

Even though the first phase of work here is on schedule , work for Phase II has slowed down. The total project involves around 28 million square feet of built-up space. Of this, Phase I (around 8 million square feet) is on schedule. For this, 13 towers are being built (12 residential and one for offices).

The second phase of the project, that has been affected, is mostly going to be office towers, entertainment centres and few residential towers. According to L. Madhusudhan Rao, Executive Chairman, Lanco Infratech, the commencement of construction here is now linked to market condition, which, at the moment, is uncertain.

 

 — Additional reporting by K.R. Balasubramanyam, Nitya Varadarajan and E. Kumar Sharma