News & Views on Indian Real Estate

Friday, July 25, 2008

Developers now concentrate more on construction than buying land

These days, all is not well in the real estate market as property sales have gone down severely. The implications of the slowdown have resulted in developers facing a shortage of capital and plans to buy more land or come up with new projects have been put on hold until some recovery is shown. According to Mr. Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj,"It has its advantages. The builder has paid the acquisition cost and the debt has been incurred. With soaring inflation and increasing cost of steel and cement, the cost of construction is bound to increase. If the developer concentrates on the delivery of the project on time, cost overruns will be in check and he will stand to earn sooner – as the product hits the market." However, Mr. Niranjan Hiranadani, Managing Director, Hiranandani Group, disagrees with the notion that the liquidity crunch and the resultant slowing down of acquisition of land will bring down property prices. "If it continues, lesser housing stock will be constructed, which will result in property prices not coming down," he added.