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Fresh project launches decreased significantly in the last few months as developers remained cautious (Photo: Mint)
Fresh project launches decreased significantly in the last few months as developers remained cautious (Photo: Mint)

Builders defer project launches due to market instability

The covid-19 crisis has added to the woes of the real estate sector which was already reeling under a prolonged slowdown

Bengaluru: Real estate developers are deferring launches of residential projects to next year or reducing the number of fresh launches due to overall instability in the market and higher demand for ready homes.

The covid-19 crisis has added to the woes of the real estate sector which was already reeling under a prolonged slowdown.

Tata Realty and Infrastructure Ltd (TRIL) has deferred its residential project launches to 2021-22, which includes two fresh launches and a re-launch in Mumbai. The two fresh launches are of around 1.5 million sq ft.

Sanjay Dutt, MD and CEO, TRIL however said the launches have been deferred primarily to due to the market condition which is not conducive to bring in fresh inventory.

However, the Mumbai-based firm in the process of launching a 0.6 million sq ft of commercial office project.

Fresh project launches decreased significantly in the last few months as developers remained cautious during a period when commercial activity across sectors slowed down. Launches decreased 81% during the June quarter to 12.564 units, according to a PropTiger report. The January-June period showed a 65% dip in launches to 48,232 units compared to year-ago period. Launches declined across cities, especially in Mumbai, Pune, Kolkata and Chennai, the report said.

Reeza Sebastian, president, residential business at Bengaluru-based Embassy Group said that while it has project lined up for launches, they will be rolled out only early next year.

“There is a clear preference for ready-to-move in inventory and customers who aren’t facing any job instability are going ahead and buying. But there is instability in the market.

Many developers have gone back to the drawing board on how to make projects more efficient. We are also focusing on new specialised asset classes like senior living. Integrated townships will also be in demand," she said.

While Mumbai-based Oberoi Realty Ltd was earlier targeting to launch its Thane and Goregaon Phase 3 projects in the March and June quarters respectively, the company has now pushed the former to the latter half of FY 21 and the other launch only next year, Adhidev Chattopadhyay, analyst, ICICI Securities Ltd said in a report.

Some developers in Bengaluru, which has been an outlier among operty markets in terms of performance, are however planning to launch projects even if at a lower momentum. Most of these launches are in the mid-income category.

Rajendra Joshi, CEO – residential, Brigade Enterprises Ltd said they are launching a new tower in the El Dorado project in north Bengaluru in September, which offers affordable, below 45 lakh home.

Even though sales are definitely slow, at around 60-65% sales compared to last year, there is demand for larger and ready units, Joshi said.

Bijay Agarwal, managing director, Salarpuria Sattva Group said they are launching an affordable project under Pradhan Mantri Awaas Yojana scheme next months and may launch a couple more projects.

“We usually launch 8-9 residential projects a year but this year we have gone slow. We will slowly start launching some projects selectively," Agarwal said.

Given that customer confidence is at its lowest execution risks are higher, many developers are deferring launches, said Pankaj Kapoor, CEO, Liases Foras Real Estate Rating & Research. “The issue is larger. Would there be only deferments or will some developers go ahead and cancel projects that are planned."

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