News & Views on Indian Real Estate

Monday, August 25, 2008

To combat the slump, Developers put projects on fast track

Property companies are rushing projects or cutting down on project completion time, by nearly 20 per cent in an attempt to overcome the liquidity crunch. Companies that took 3 years (36 months) on housing projects are now completing them in around 30 months by boosting efficiencies and using modern technology. One of the most significant reasons for the faster turnaround of projects is the decline in property sales by over 30 per cent in the last six months in Mumbai, national capital region (NCR) and other regions, which were the main revenue streams for developers. To add to their woes, the prices of cement, steel and labour, which account for more than half of the input costs, have risen 50 per cent over the last one year, putting pressure on developers' margins. Construction costs, which vary from city to city, are growing 20-25 per cent every year, said industry experts.