Overbuilding Promises A Kick In The Gut For Realtors

Nipun Sahni, director and global head of commercial real estate at Merrill Lynch Capital, says the number of information technology parks and special economic zones in the 21-km Old Mahabalipuram Road — popularly known as OMR — in Chennai surpasses demand in the entire IT industry in India.
he said at a Ficci seminar, “It will be difficult for builders to raise finances for their other developments and in subsequent phases, projects will also be postponed”.
OMR, realty analysts say, is symptomatic of the overbuilding that has happened in far too many pockets.
Two other plum areas that are likely to face the same fate, they said, are Lower Parel in Mumbai and Noida in the National Capital Region, both of which are hotspots for A-grade office space. They predict high vacancy rates.
Lower Parel has a ready office space of 4.5 million square feet and will add a minimum 5 million square feet by 2009, taking the total commercial space to 9.5 million square feet.
Of this, DLF, India’s largest realtor, alone will add 3.8 million square feet through office space and a mall.
Indiabulls Real Estate, Peninsula Land and Orbit Corporation are also busy completing their projects in the locality.
To boot, top players such as DLF, Unitech, Emaar-MGF, Akruti City, Puravankara and others have expanded to states they were not present in, and have ended up in close proximity to each other, creating oversupply pockets.
What started as a building boom in 2007 across emerging markets such as Chennai, Hyderabad, Bangalore and Indore is a year later, a very different story thanks to the Reserve Bank of India’s rate hikes, the wealth-depletion effect of falling stock markets and economic headwinds.

One Comment

riathareja

Posted September 30, 2008 at 1:44 am | Permalink

The current scenario of the Indian real estate market has made buyers hesitant with regard to the purchase of residential property. This has forced developers to go out of the way to sell their properties. Just three months ago, no developer was willing to go on record that they were offering cash discounts to home buyers. Reason being, they did not want to give it away that property prices were under pressure. However, falling sales and rising inventory over the last 18 months have forced them to offer cash discounts, besides other measures in this buying season.For more view- realtydigest.blogspot.com

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