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Stalled projects, stuck payments: architects wake up to harsh realty

Stalled projects, stuck payments: architects wake up to harsh realty
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First Published: Sun, Dec 28 2008. 10 28 PM IST

Hard times: Sanjay Puri says the bigger the architect, the more damage he suffers because of the sheer number of projects he takes on.
Hard times: Sanjay Puri says the bigger the architect, the more damage he suffers because of the sheer number of projects he takes on.
Updated: Sun, Dec 28 2008. 10 28 PM IST
Bangalore: Architect Sanjay Puri and his team were busy giving finishing touches to the working drawings for a 200-acre township in Nagpur for a client he doesn’t want to name, when they were informed in November that the project has been put on hold. Puri’s firm, Sanjay Puri Architects Pvt. Ltd, had been paid only half of its fee, and with the project put off, there is no certainty if the remaining bit will be paid.
“As large projects get stalled midway with developers unable to complete them, architects, even after completing their jobs, are not getting paid,” Puri said. “The bigger the architect, the more damage he suffers because of the sheer number of projects that he takes on.”
Hard times: Sanjay Puri says the bigger the architect, the more damage he suffers because of the sheer number of projects he takes on.
The Mumbai-based architecture and design firm has completed about 60 shopping malls, a 1,100-acre township in Sonepat, Haryana, by TDI Infrastructure Ltd and says it now has 180 projects on hand. But it is not just the Nagpur project which has been stalled, a couple of other projects, including a shopping mall in Pune and a project in Whitefield, Bangalore, have been delayed and payments stuck.
Puri is not alone in his predicament as several architecture firms, which had witnessed a boom in the last couple of years, wake up to the slowdown in the real estate market.
With projects being shelved and new project launches restricted, developers are unable to pay architects, many of who are now scouting for work and looking at big corporate houses and government projects to sustain themselves. Big architecture firms with multiple, large projects, who have been dependant on developers, are the worst-hit as integrated townships, commercial offices and big shopping malls have got stalled midway.
There are about 35,000 registered architects in the country, out of which 6,000-7,000 practise abroad, according to the Mumbai-based Indian Institute of Architects (IIA).
“A few big architects have already started cutting down their staff strength by 20-25% and this will happen to more of them with the situation unlikely to get better in the next three months,” said Vijay Garg, joint secretary of IIA.
Salaries in the sector have started dipping due to the slowdown. Fresh architecture graduates who used to get Rs25,000 are now being offered Rs18,000. Well-known architect Hafeez Contractor said that with the major chunk of work coming in from developers, payments have been affected, forcing even him to lower his fee. “We are intensely exploring work opportunities in the corporate sector, hospitals, convention centres and even hotel projects as a strategy,” said Contractor, who has a team of 400 people working for him.
Architect Puri, who earlier focused exclusively on shopping malls, is now doing a variety of projects to sustain himself through these difficult times.
While Contractor says he hasn’t laid off a single employee, yet, salaries have been frozen and recruitment stopped. He is also moving people from one department to another to use resources optimally.
Itty Zachariah, founder and principal consultant of Bangalore-based Zachariah Consultants, a 35-year-old firm, said that developers are giving architects a hard time as they keep changing project plans midway to make them more viable. If a developer had planned a shopping mall on a particular location, he is changing it to commercial office space now as most malls haven’t met expectations. IIA’s Garg said that not just developers, but big corporate houses have also shrunk their project sizes making the architect’s job more difficult.
“I am doing a Chhattisgarh project for a business house where it has now decided to build 250 housing units instead of 400 because of the liquidity crunch,” said Garg, who also runs the firm Design Consultants in Delhi.
Architects doing large projects for developers are in trouble because such ventures need large investments, said Pankaj Renjhen, managing director of Jones Lang La Salle Meghhraj, a property advisory. “Big architects usually concentrate on high-end category ventures and these have been hit most due to less demand. Architects with projects across the country are better off because the smaller markets are less affected compared with Delhi and Mumbai.”
Pankaj Vir Gupta, a partner in the Delhi-based firm Vir.Mueller Architects, said the current scenario has been a mixed blessing as till recently, it was a volume game with architects, but now with less work around, the quality of work is better. “We are relatively safer because we mostly do international and institutional clients who don’t depend on the market for sale like developers,” Gupta said.
A Mumbai-based developer, who has now ventured into Bangalore, and requested that neither he nor his company be identified, said: “We were to launch four projects in the last five months and all of them got postponed due to low sales in other projects and lack of funding. Our architects have been there with us for many years and we have explained to them that this is an unusual situation and their payments have been delayed but it will be paid as soon as a couple of projects are launched early next year.”
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First Published: Sun, Dec 28 2008. 10 28 PM IST