Gurgaon Real Estate

So what's in store for the prospective buyer? Will this move in any way impact buyer behaviour? And to what extent will demand go up in the real estate sector? Developers say although such a rate cut lowers the interest burden on a mid-income family, more dramatic cuts are needed to make housing affordable. "A 75 bps rate cut is not enough to fuel demand. It is too small a step to reverse the negative sentiment.

Construction of housing for the masses will only gain momentum which can be a catalyst for overall growth. Capital/credit should be made available at 7.5-8.5% per annum to credible developers and end-users," says Mohinder Puri, CEO and MD of Delhi-based Puri Constructions.

Agrees B P Dhaka, COO of Parsvnath Developers. He says housing demand will get a real boost when the interest rate on home loans falls to 9%. "This is a welcome step. But the real effect will come through only if interest rates come down to 9%. The present cut will only have a marginal impact."

Vijay Jindal, CMD of SVP Builders, feels it is expected that home-buyers will take advantage of this drop in interest rate but to a limited extent. "Last few months have been bogged down by the high home loan rates and the end-user was waiting for it to come down. However, a cut down of 75 bps is not going to turn the future of real estate. If the banks bring down these rates to a greater extent then probably we will see a rise in the number of people coming forward to buy."

At present, many PSU banks, including State Bank of India (SBI), Oriental Bank of Commerce (OBC), Central Bank of India (CBI) and Allahabad Bank, have reduced prime lending rates (PLR). Global real estate consultancy Jones Lang LaSalle Meghraj (JLLM) explains what end-users can expect after this cut and how the EMI component will get smaller. Depending on the actual home loan amount, one would be able to compute the difference now.

For example, if the EMI on a home loan of Rs 1 lakh taken on a 20-year tenure was Rs 1,200 earlier, it will now be Rs 1,000. This will either reduce repayment amount per month, or the repayment period. Typically, low-to-mid end families will opt for reduced EMIs per month since this will increase the money at their disposal. For the High Income Group (HIG) borrowers, monthly savings is not a very important consideration, so they will opt for shortened repayment durations instead.

Indian real estate developers have been reeling under the pressure of formidable forces -- steep borrowing costs now further worsened by a funds crunch and slackening demand for property. While real estate sector has traditionally been subject to market cycles, the deteriorating funding scenario appears to have caught the players off-guard this time round.

The pain appears to have reached such an advanced stage that the National Real Estate Development Council (Naredco) and the Confederation of Real Estate Developers' Association of India (CREDAI) have petitioned the Government to ease FDI investment and External Commercial Borrowing (ECB) norms and also formulate a policy for rescheduling of loans to facilitate the rollover of players' existing debt.

While most industries have been hurt by higher borrowing cost, the problem of availability of funds faced by the realty sector is a fairly recent development.

"Barring the last 45 days when the banking system faced liquidity issues, banks have always been funding the sector," says Ram Yadav, Head Finance and Strategy of Mumbai-based real estate redevelopment player Orbit Corporation.

Sushil Mantri, Chairman, Mantri Developers, also suggests that it could only be natural for banks to turn cautious under the current financial market circumstances not only in case of real estate but across various fields of businesses.

While larger players or players with sufficient private equity backing (early on) have managed to get money to fund their projects, albeit some at higher costs, the CREDAI's appeal is clearly suggestive of troubles in raising loans by the small- and medium-sized players.

Root of the problems
While it is quite usual nowadays to attribute every problem in every sector to the "global credit crisis", the genesis of the problems for the Indian realty sector can actually be traced a little way back, to 2007.

Anurag Mathur, Joint Managing Director, India, Cushman & Wakefield, summarises the issues thus: "Debt has always been a restricted commodity to the sector; the Government's move to tighten the screws in the sector to control inflation increased the cost of funds. At the same time, the crisis that began in the West resulted in drying of funds from sources such as private equity and other foreign funds; IPO market for the real estate too was the first to take a beating on the back of global market events".

A rare occurrence
If external debt funding had been the only issue, then property developers could nevertheless have generated some internal cash flows from completed projects to plough into the business? Property prices could also have been slashed to generate faster cash flows.

Vinayak Chatterjee, Chairman of infrastructure consulting company Feedback Ventures, traces the current crisis to a series of events, whose probability of occurrence, all at once, is rare and was therefore unexpected.

According to him the pull back of consumer demand as a result of higher interest cost, reduced the demand for ongoing projects; this was the earliest sign of trouble. He opines that this phenomenon was also observed in the dip in consumer loans -- be it vehicles, durables or homes.

• The near-term solution
  
• Hoarding land bank

While it has also to do with area available for high-rise group housing and commercial projects under the new Gurgoan-Manesar master plan nearing their earmarked limits, the spell of hectic construction activity in Gurgaon is likely to continue in the years to come. In fact, the number of licenses granted for group housing, plotted colonies, information technology parks and commercial projects in the Gurgoan-Manesar belt this year itself is a whopping 134 even as some out of a total of 237 licenses issued ever since the realty highpoint of 2005 have still to come on ground.

The slowdown
However, the demand slowdown and liquidity crisis has resulted in developers not being in a hurry to get layout and building plans approved and being content at holding on to their land banks.

"Developers are adopting a wait-and-watch approach. The projects may take off once the liquidity and demand scenario seems favourable," says S S Dhillon, director, Haryana Town and Country Planning Department. dhillon adds that the real impact of the slowdown will only manifest itself once there is no progress in projects which have been granted licenses.

Also, against the norm earlier, when there were a large number of smaller players in fray, it is now only the bigger ones with some resilience.

Rajeev Talwar, group executive director of DLF, marks this as the worst financial crisis to hit India which is "affecting every sector in the country, not just real estate".

"This situation is a wake-up call and the government needs to do a lot more than what it has done so far. Mere cuts in SLR and repo rates are not going to lessen the threat of massive closures and huge layoffs." He proposes two ways of alleviating the current downturn in real estate. "Empower the home loan buyer by lowering interest rates and give real estate level a level playing field. All projects should at least be judged on the basis of merit," he said.

Faridabad
In the case of Faridabad, Haryana's next realty hotspot, the boom has finally gone bust. Against 180 applications for group housing in 2007, the figure this year is just 43 while in the case of commercial projects, the number has plunged from 75 in 2007 to nil in 2008. Even in case of plotted colonies, the applications received are a mere 40 against 468 last year. Even the fate of many out of the 62 projects (group housing, plotted colonies, IT parks and commercial projects) granted licenses in Faridabad since 2005, including 13 projects this year, now seems uncertain.

Chandigarh
While land prices in Chandigarh have been recording a new high with every government auction the huge number of private luxury housing projects that have come up in and around the city in the last three years, are finding few takers.

The most hyped luxury project, Pride Asia, a joint venture luxury project of Parsvnath Developers and the Chandigarh Housing Board, is also in trouble with no jump in its sales figure in the last few months and just over 10 per cent of its total dwelling units have been sold so far.

Aimed to cash in on the information technology industry (it is in the IT Habitat area of Chandigarh) and rich Punjabi diaspora, its luxury Rs 6-crore villas and Rs 4-crore penthouses have failed to attract buyers while its one/ two/ three/ four and five-bedroom apartments in the price band of Rs 52 lakh to Rs 3.8 crore are the only ones to be sold off.

Uppal's high-end Rs 1.6 crore to 1.75 crore luxury flats in Chandigarh have also got a lukewarm response, while big names such as Emaar MGF, TDI, Unitech, Pearls Infrastructure, Ansals and Westend Group which have rolled out high-end projects in Mohali are all been hit by slowdown in demand.

The worst hit, however, are small developers with projects in the periphery areas of Chandigarh such as Zirakpur, Dera Bassi and Kharar. From distress sale of flats to defaults forcing banks to recover property, the crisis has hit both builders and buyers alike in these areas. Many projects are running behind schedule and deadlines for handing over of flats are being extended.

In October 2007, Sobha had announced entry into north India through a consortium with QVC Realty, the realty arm of IL&FS, and Chintels India, a north-based local developer. While Sobha was to be the lead developer, the 192 acres in Gurgaon on which the project was to come up, is owned by Chintels. A senior official of the consortium, who did not wish to be named, confirmed the delay.

"It might now start in June 2010 because getting funding and licences is becoming difficult," the official said. "Sobha is likely to sell a minority stake to a private equity player to bring in money for the project," the official added.

But Sumit Keshan, chief financial officer, Sobha, said since the project has not been launched yet, "there is no way you can say it has been delayed". Keshan said Sobha is conducting a feasibility study and gauging demand for the project. "Once we assess that, we will put in the money," he said. Keshan also denied seeking private equity funding "right now".

The consortium was to develop an integrated township in Sectors 106 and 109 in Gurgaon. Chintels and Sobha were to develop a group housing project on 72 acres in Sectors 108 and 109, where the developable area is 5.7 million square feet.

Sobha paid token money to Chintels for land acquisition, the unnamed official belonging to the consortium said. Though the consortium has received letter of intent from Haryana, it had not yet received the licences to develop the township. Sobha had told analysts last year that the Gurgaon project would be launched in the first quarter of the current fiscal.

Later, it pushed the date to the third quarter, but if sources in the know are to be believed, the project has long way to go before it sees light of the day. "Sobha's cash flow position is very strained for it to be able to bring in private equity contribution right now. Their Chennai project launch, which was scheduled for last quarter, has also been delayed. Sobha has revised the launch of the Gurgaon project to the first quarter of next fiscal, but it is very unlikely they will be able to do it. Nobody is ready to fund in these times," said an analyst with a local brokerage.

Groups like the National Real Estate Development Council (Naredco) are petitioning for new measures to make it easier for foreign property investment firms to buy in India.

Hindu Business Line also reports politicians are being asked to intervene to ease a shortage of credit for developers looking to complete building projects.

Attention has swung to the Indian government after China announced a $586 billion package for infrastructure and other domestic projects in a bid to help its own economy.

Quoted by Hindu Business Line, Nardeco director general R.R. Singh said:

    "The monetary policies of the Reserve Bank of India for real estate projects and home loans by Indian banks, closure of ECBs and rises in interest rates together with the stock market crash have lead to a situation where credit has dried up and buyers are hesitant to invest despite a strong demand."

Last month the Reserve Bank of India (RBI) cut rates by 100 basis points to eight per cent following a meltdown in financial markets.

RBI said it would continue to monitor the situation and would take more action "as appropriate".

Foreign investment in Indian property remains a contentious issue in some areas, with the government recently warning against illegal sales to outside buyers, particularly in the Goa region.

Chandra, who was enamoured of the premium accommodation segment, has realised the value of pragmatism and is altering his plans. "At the Unitech Nirvana, for instance, instead of our earlier plan of offering 100 independent villas, we will be offering three separate apartments per villa--a total of 300 units," says Chandra. (The plot size remains the same.)

With an interest payout of Rs 900 crore this year, Chandra admits that margins are under stress. His solution: no discounts to customers. "Input costs--of steel and cement--have come down, so rather than giving discounts to consumers, we could look at boosting our margins," he says. Unitech is, of course, somewhat cushioned by the Rs 6,120 crore it got from the sale of its 60 per cent stake in telecom venture Unitech Wireless to Telenor.

India's largest real estate company, DLF, too, has not been spared the blushes as it saw its top line decline marginally in the second quarter of 2008-09 to Rs 3,840.2 crore from Rs 3,846.3 crore in the first quarter of the same year. EBITDA margins have also shown a decline of two percentage points in this quarter vis-à-vis the preceding quarter.

"The entire economy is in a crisis mode, so it will have an impact on the real estate sector," admits Rajeev Talwar, Executive Director, DLF. The company, which claims its pre-booking should keep it comfortably liquid till end-2009, is willing to sacrifice growth over the next six to 12 months to shun risk and could push back the hotel venture's launch by 12-18 months.

It's an indication of the magnitude of the change in market dynamics since January this year. "Over the past three years, the plans of the realty companies were certainly ambitious, led largely by economic growth. In fact, the extent of expansion on the land-bank front by many of these developers was quite unnerving," points out Sanjay Verma, Executive Managing Director, South Asia, Australia and New Zealand, Cushman & Wakefield.

While a general price rationalisation was on the cards as the end of the boom cycle neared, the financial meltdown across economies has left real estate companies gasping. "This credit crunch was unprecedented and it created a panic situation, leading to a lot of uncertainty in the market," observes Verma.

India's largest real estate developer, DLF, has put on hold construction of one of the most high-profile mall projects, `Mall of India', at Gurgaon, as retail rentals fall and cash becomes precious. The proposed venture was set to be the country's largest mall, with around 4.5-million sqft space.

A DLF spokesperson said: "There is no truth in the statement that `Mall of India' has been put off. Construction has not been stalled. Its planning and development is under full swing." A visit to the site, however, gives a different picture. Till a few months ago, several workers could be seen at the project site and excavation work was in progress. Now, there is hardly any activity on the site, clearly indicating that company has slowed down the pace of the project.

While announcing the September quarter results recently, DLF V-C Rajiv Singh had said the company will "in the short-term reduce capital intensity of the business model". He had said the company will shift focus from capital-intensive projects such as malls to mid-income homes and offices, where revenue realisation is faster.

Speaking to Realty Plus, Sushil Baderwal, CMD, Baderwals said, "We are undertaking real estate projects spanning townships, group housing, shopping malls, office spaces, hotels, IT Parks and SEZ's focusing on tier II & III cities. The company has also diversified into infrastructure development with roads, flyovers and airports projects."

According to Sushil Baderwal, Baderwals will launch an integrated township in Udaipur in collaboration with a local builder. The township, complete with a mall and a five star hotel, will come up at a cost of Rs 650-700 crore. The group, which is already undertaking a township project in Panipat on NH1 in a joint venture (JV) with Ansal API and an independent township project in Mohindergarh (Haryana), will do township projects in Bikaner and Kaithal (Haryana) as well.

Baderwal further informed Realty Pulse that his company has planned to develop a high-rise group housing project over 32 acres in Sonepat, besides another group housing project in Bhiwadi. "On the commercial real estate front, we will be coming up with one of the largest mixed use developments comprising shopping mall, multiplex, luxury hotel and an office block in Bhiwadi. In Panipat too, we are developing a mall, multiplex and a hotel," added Baderwal.

A 100 acre multiproduct SEZ and a 25 acre IT Park in Indore and a resort and airport project in Panna (Madhya Pradesh) are the other commercial projects which Baderwals group will be undertaking. 'Starting next year, we will be launching one project a month. All these projects will be funded through internal accruals, foreign funding and bank loans. Being a zero debt company with over 1000 acres of land bank, our real estate development plans are not at all impacted by the current credit crisis and slowdown in demand", Baderwal said.

Real estate player Vipul, for instance, is looking at PE funding for some of its projects. The player has already signed a term sheet with UK-based PE fund for a mixed use project in North India. "They will have a 40% stake in one of our Special Purpose Vehicles (SPVs). We are looking at PE funding for some of our other projects as well. During the last three months, banks have been reluctant to lend. Hence, there is no option but to think of other conducive options," says Atul Banshal, senior GM, finance, Vipul.

According to estimates, real estate companies have a total debt of around Rs 25,000 cr, and many developers have been lobbying for a relief from the government in terms of re-scheduling of their outstanding payments.
In a bid to attract cash inflows, real estate major Unitech too recently announced divestment of stake in its telecom operations, and the company has been eying at closing a private equity deal, sources said. Delhi-based Omaxe Group has slowed down its projects that are at a nascent stage of development and is open to PE funding for the future.

Sanjay Verma, executive MD, South Asia, Cushman and Wakefield feels that the process has just begun. "Going forward, some of the players may also have to sell some assets to remain afloat. That isn't necessarily a bad thing as one can decide where to focus. These kind of deals are currently being done more by invitation as the market right now does not offer a logical price mechanism." Private debt, PE deals and strategic divestment of assets are some of the alternate fund-raising options now as against debt from banks or foreign exchanges, he feels.

However, developers such as Parsvnath and Hiranandani still swear by the traditional sources of funding. Says Pradeep Jain, chairman, Parsvnath Developers, "We are comfortable with our cash flows and plan accordingly. We have long-term funds that care of our requirements and financial institutions have supported us. Private debt is out of the question for us."

Ditto for Niranjan Hiranandani, MD, Hiranandani Developers who says that there isn't any innovative financing strategy that they are specially thinking of at present. "We always look at all sources of funding and haven't changed anything specifically in the current scenario."

May slow due to the global financial meltdown and a fall in demand for such projects.An executive at RIL's external public relations agency, however, said that work on the SEZs had not begun.A senior RIL executive said the project was going slow and blamed the current business environment, which he described as "bad in all areas".

"At this moment, we have been told not to spend money. Our capital expenditure on the sites have been stopped. The meeting to decide what to do next will happen next week in Mumbai," said the executive, who didn't want to be named because he is not authorized to speak to the media. "However, no formal directions have been issued."

The SEZ plans are being executed by Reliance Haryana SEZ Ltd, a joint venture between Reliance Ventures Ltd, a subsidiary of RIL, and the Haryana State Industrial and Infrastructure Development Corp. Ltd, or HSIIDC, the state's industrial development agency. While Reliance holds a 90% stake in the SEZ arm, the rest is with HSIIDC.

Also See Difficult Times (PDF)mint had reported in July that Reliance Haryana SEZ's land acquisition plans were facing hurdles, with land owners in the area demanding around three times the amount the company is willing to pay because land prices have increased since late 2006, when it made its offer. The company had acquired 9,500 acres of a targeted 25,000 acres in July.

"Office space will be given out on lease to both small and big companies. Depending on the market situation, we will decide the rent rate. This is not only for new players but also an opportunity for existing companies to expand," said M K Sardana, general manager, IT. Tenders have been invited for the project. "It is currently in request for proposal state and the work would begin soon," added Sardana. When asked about the future of the IT and ITeS sector vis-a-vis the current global meltdown, Sardana said: "There has been no direct impact on the sectors but they surely are in a state of panic and have implemented cost-cutting measures."

According to a recent report, the Haryana government has spent Rs 4,107 crore in establishing 1,976 small-, medium- and large-scale industries since April 2005 till September this year. According to the report, about 68,000 people are employed in these sectors and Rs 7,330 crore has been generated in returns.

At present, there are over 400 IT companies functioning in Gurgaon alone which includes companies like GE Capital, Google, TCS, Motorola, Convergys, among others.

Stating this in Chandigarh, an official spokesman said that total exports from district Gurgaon in the Information Technology and ITES industry has touched a mark of Rs 18,000 crore at the end of last financial year. In the year 2006-07, the software export from Gurgaon was Rs 15,000 crore whereas it was Rs. 10,700 crore in 2005-06.

He said that it has been made possible due to industrial friendly climate created by the present Government led by Chief Minister Bhupinder Singh Hooda.

The present State Government had assumed office on March 5, 2005.

Referring to the details of industrial units set up during this period in Gurgaon, he said that out of these units, 1924 small scale units have been set up with an investment of Rs. 1531 crore and these units provided employment avenues to 45,600 unemployed youth.

He said that 52 large and medium scale industrial units were set up with an investment of Rs. 2576 crore and 12,455 youth were provided employment opportunities.

Singh and Chandra recently came together to call on a leading UPA minister and top Congress politician to sound him out about the travails of the real estate sector, that has seen prices fall and credit disappear for builders.

Both DLF and Unitech, firms listed on the Bombay Stock Exchange, have seen their scrip fall over 80-90 per cent since January this year. The duo is expected to meet other authorities too.

Central to this lobby effort is the developers' belief that a housing market crash in India, would spell further bad news.

"The top five real estate developers currently are providing direct and indirect employment to nearly 250,000 people across thousands of sites in the country.

The impact of a depressed market will not be only felt on our share values but on jobs and overall economic growth", said a developer close to the effort to convince the UPA to ease up things for homeowners and developers.

The realtors want the UPA to push for policy amendments which would see banks lower the risk weight attached to investment in the real estate sector.

In 2007, the central bank had increased the amount of money that banks set aside as a proportion of their total lending to the sector.

Separately, it also raised interest rates in order to control inflation, a cycle that was only recently broken in order to ease liquidity in the financial system.

"We are really an industry. Yet, we are not treated as one. We create infrastructure, but the norms are skewed against us.

The government earns so much revenue from us in taxes but continues to look down upon the sector as a bubble that needs to be broken", the developer added.

UPA sources confirmed that Singh and Chandra had come calling to explain their difficulties.
Realising the success that other sectors like civil aviation and telecom have had by lobbying the government, real estate developers are expected to continue their lobby effort.

Already, several mid-size and small developers in the national capital region of Delhi are meeting once a week to evolve a common agenda.

Public-private partnerships have become the mantra for governments (Centre or states) for developing infrastructure. Most of them are now structuring road and airport projects by awarding large parcels of land at less than market rates to partly compensate the cost of infrastructure development.

Private companies believe that every news story of their securing a concession would cause a magical jump in their stock price.

Each time the government invites bids for any infrastructure project, there is a mad rush to bid the lowest. Most end up trying to quote a negative grant, where the concessionaire pays a fee to the government for securing the project rights. Several are now bidding ridiculously low amounts without proper project appraisal, in the hope they would be able to influence and change the concession terms later.

"Land infrastructure" bundled projects can be of two types. Type 1 is in more developed parts of the country. Examples: the Outer Ring Road of a metro or airports in tier I cities. Here, the land awarded to the concessionaire is "technically" ready for immediate development. "Ready" means real estate development, comprising residential, shopping, hotel and hospital projects, can be absorbed by the market, since the area has enough economic activity to support all that.

Type 2 is located in lesser developed parts of the country. Examples could be the Ganga expressway (a 1,000km stretch connecting the western and the eastern borders of UP) or an airport at Gulbarga in Karnataka. Here, too, the concessionaire gets the rights to develop large parcels of land to compensate the cost of developing the infrastructure asset. However, in most cases, the land cannot be developed immediately. Imagine building a residential complex of 1,000 apartments in Gulbarga--there wouldn't be enough buyers! In such projects, economic activity has to first be triggered in the region. The infrastructure asset is an enabler for economic ac tivity; by itself it can't trigger growth. Some industrial or commercial activity would be needed to create value for the land.

As companies begin to see increasingly grim outlooks for 2009, they would be wielding the axe in the coming days. Trade body Assocham said job cuts would be across the steel, cement, construction, real estate, aviation, IT-enabled services and financial services sectors. "Employers have no other alternatives as part of their corporate strategy... for sustaining their operations with squeezed margins (even) after drastic cost cutting measures," Assocham said in a statement. RBI last week cut its forecast for growth in 2008-09 to 7.5-8% from its earlier view of 8%. This compares with the economy's 9% growth in 2007-08.

The news of job cut across sectors could not have come at a more inopportune time for the ruling alliance which is facing a major electoral test next month. With unemployment already at a politically damaging level, the talk of fresh cut in jobs can prove to be politically fatal for the government. Recent opinion polls have shown voters placing far higher priority on economic concerns than other issues.

The government got a glimpse into the political cost of the unemployment problem a fortnight ago when Jet Airways announced its decision to sack 1,900 employees citing declining demand and high fuel costs. The government leadership, which initially refused to intervene in the corporate decision, was later seen claiming credit for reinstating the employees.

Past electoral bouts had exposed the ruling side's inability to inspire confidence about its fitness to lead the nation's economy. The spiralling inflation and in the squeeze on living standards became lethal weapons in the hands of the Opposition in electoral combats.

Congress leaders, who were hoping that the finance minister's `growth story' would sell in the coming polls, will now have to devise ways to offset the negatives from the economic management of the government. The BJP has been placing the blame for the current crisis at the government's doorstep. "The mismanagement of the economy has already led to several major imbalances such as high fiscal deficit, high current account deficit, elevated inflation levels, and a collapsing real estate sector. None of these is the creation of the recent global financial crisis. All of them are directly the result of the complacency and the cavalier attitude of the UPA government which slept on the wheel while the crisis was brewing," says BJP's former finance minister Yashwant Sinha.

The BJP has also been maintaining that the liquidity crisis is a creation of the government. "The BJP has always held that the UPA government went about the wrong way to tackle inflation. It totally ignored the supply side which was responsible for this inflation. Instead, it went about tightening money supply and raising interest rates which not only sucked liquidity out of the market, it also made money dearer. The UPA government took these monetary measures at a time when its own fiscal deficit had reached unsustainable level. The withdrawal of their investments by FIIs has added to the problem only in a small way," says the BJP in a statement.

The Left is also planning to take on the government over the job cut issue. Left trade unions are meeting on November 5 to take stock of the situation and fashion an action plan for mobilising opinion against the government.

ACHILLES' HEEL

Congress leaders, who were hoping that the finance minister's `growth story' would sell in the coming polls, will now have to devise ways to offset the negatives from the economic management of the government.

Past electoral bouts had exposed the ruling side's inability to inspire confidence about its fitness to lead the nation's economy. The spiralling inflation and in the squeeze on living standards became lethal weapons in the hands of the Opposition

These three districts have been dotted not only with multiplexes, new industrial units but are also making rapid advances in infrastructure development, including motorways, flyovers and new housing complexes.

Unfortunately, the rest of Haryana, especially areas that are in the immediate periphery of the shared state capital, have not been that lucky to get new investments that could accelerate industrial as well as its infrastructure development.

If one is talking about new generation and modern lifestyle that centres on young executives, mall goers, multiplexes for entertainment and high-rise buildings, then Gurgaon and Faridabad followed by Panchkula to a limited extent are the answers.

Delphi Automotives, DLF Universal, Genpact, Hero Honda, Honda Motorcycles and Scooters, HMSI, Flextronic Software Systems, IBM India, Indian Oil Corporation, Johnson Matthey, Maruti Dog, GlaxoSmithKline, Sona Koyo Steering Systems, Svedala, Wipro Infotech, Yamaha Motors and YKK India are among the companies which have entered Haryana during the past two decades. Incidentally, almost all of them have chosen the National Capital Region (NCR) as their investment destination.

At the height of the real estate boom in 2006, developers were selling premium apartments of Rs 80 lakh to Rs 1 crore and above at values that were unheard of in the Indian market.

From benchmark values of Rs 1,900-2,200 per sq ft in Gurgaon in 2004, these values had peaked to even Rs 6,700 per sq ft in 2006.

So what happens today when values have largely been holding and have come down in select markets by even 15-25%. Explains an investment adviser: "This is probably the best time to buy because values have not escalated for over a year and in many cases have dropped significantly where the owner needs to liquidate the asset."

Take the case of a buyer in Delhi's upmarket Greater Kailash I. An apartment worth Rs 2.5 crore was negotiated at as low as Rs 1.9 crore if the buyer was willing to make a cash down payment. After all, with developers having to borrow at between 36% and even 48% interest due to the liquidity crunch, it is cheaper to drop prices and get cash down payments rather than hold higher values and borrow at high interest rates to meet working capital requirement.

"The point is," explains a real estate investment adviser, "that there is plenty of money in the market. People who played the stock and real estate markets and exited before the slowdown have made a large fortune and are sitting on ready cash. They are the ones who are lending to the developers today." So they are same people who are on the prowl for bargain deals.

"These are tight money market conditions," agrees Vishal Gupta of Ashiana Housing and Finance. "But groups which focused on projects and buyers and saw regular completion of projects are not struggling today. The ones who sold and used that money to invest in land banks are the ones who are now struggling to meet capital requirements," he adds.

The project is being built adjacent to commercial hub of 79 is well connected to the capital city and the adjoining areas.

The Omaxe Spa Village, a living concept which is above the ordinary, brings the Leander Sports academy and world renowned rejuvenating Thai Privilege Spa within the complex. State of the art Tennis court and fitness center will be exclusively designed and managed by Leander Sports Private Ltd to make healthy living a reality. Thai Privilege Spa will also design and manage its world renowned spa in The Forest Spa within the complex.

The Omaxe Spa Village offers Luxury apartments & penthouses with exceptional architectural designs and ambience pampering mind, body and soul.

The apartments and penthouses in the area ranging from 1600 sq ft - 4430 sq ft are priced at apprx. Rs 2502 per sq ft. To unwind, the project also offers Indoor games; Internet room, TV lounge, Library, Tennis and multi purpose Court. The club also takes care of professional life of the occupants by providing a grand conference room with broadband connectivity, fax, video conferencing etc.

Mr. Rohtas Goel, CMD, Omaxe Ltd says "the project will treat the occupants with exotic experience of high standard healthy living", he further added, "the project with easy accessibility from Delhi will also have facilities like medical and institutional in close surroundings."

Being in Faridabad, Omaxe Spa Village comes with a lot of advantages with location being the prominent one and improved infrastructure with easy accessibility to Delhi. The approved Metro project link along with the proposed Badarpur elevated highway between the two cities would act as cherry on the cake. Also the prices of the project are available at economical rate as compared to the existing prices in Delhi NCR region.

Over the last few years Faridabad has emerged as one of the fastest growing areas in the National Capital Region. The new flyover over Badarpur crossing and an expressway linking Palwal, Manesar, Kundli, Faridabad, Noida and Ghaziabad will provide interconnectivity among various satellite towns. Now, civic agencies like MCF and HUDA are coming forward to develop the area.

The Metro link between Faridabad and Delhi would also bring the two cities closer in terms of connectivity.

The Vastu friendly apartments will be closely accompanied by institutes such as DPS, DAV, Modern School and Medical facilities like Escorts hospital & Metro heart hospital near to the apartment in the vicinity.

Built on an earthquake resistant RCC structure, the apartments will have a high tech security and fire fighting system and 100% power back up facility along with R.O. water plant in every apartment in addition to 24 hrs water supplies through water softening plant. With exotic experience for its occupants the project with its uniqueness would also entail an AC apartment with wooden flooring in the master bedroom.

The project will also have a dedicated car parking area in basement.

"I have visited the site and the project is nowhere near completion. I am paying an EMI of Rs 12 lakh every two months," he says.

Minal Rajan, a homemaker, is upset as she has to pay a rent of Rs 40,000 per month in addition to a home loan EMI of Rs 45,000. Had her developer, Unitech, delivered the 4-bedroom apartment in Nirvana County on time, in August 2007, she could have saved a lot of money .

Likewise, Atul Razdan (name changed on request) pays monthly rent of Rs 70,000 as DLF has not delivered his upscale apartment in the Pinnacle project. The delivery was due in July 2007.

"Why should I bear the added cost for no fault of mine? The compensation of Rs 5 per square feet that developers pay in case of delay is an eyewash.

It does not compensate me for the rent I pay on a 4,000-sq feet apartment. What's more, the develop er does not pay me even this meagre compensa tion, saying it will be adjusted against the final payment," says Razdan.

Surprisingly, Haryana Government laws do not protect the interests of property buyers in case of delays.

"When developers default, no govern ment ruling binds them to compensate buyers," says Razdan.

A senior Town and Country Plan ning official told HT the government is only concerned with the issuance and renewal of developers' licences.

"Whether the project is delayed or the property buyers are not paid compensation for the delay, the Haryana Urban Development Act 1977 is silent on this issue. We would jump into the picture only when we notice any violation of the li censing norms," he says.

The DLF Belaire complex in Gurgaon, which is not close to completion. Buyers were promised possession in December 2008

Minal Rajan's current home is a Rs 40,000-amonth rented flat. And her dream home is a Rs 45,000-a-month installment, and no more.

She will have to wait.

Many upscale housing projects in the suburb of Gurgaon are running behind schedule. While some delays are normal, most have overshot deadlines by up to a year or more.

Those in the trade blamed it on the "ongoing liquidity crunch" and the global meltdown.

With funds getting sucked out of the system, they said, delays and cancellations are likely.

Another home hopeful, who didn't want to be identified fearing harassment by the builder, said, "I have been paying a rental of Rs 70,000 a month as my flat in DLF's Pinnacle is not ready yet, more than a year past the delivery date." Rajan's "booked" home is in Unitech's The Close, also in Gurgaon. She had a scare recently when she heard work had stopped. It hadn't. But when she went down to the site to check, she was told her flat would be late.

The DLF spokesman said, "The delivery of Pinnacle apartments would begin anytime soon." The delay, if any, he said, was because the company was waiting for the occupation certificate from the government.

Sanjay Chandra, Unitech managing director, denied there was a delay in any of his projects.

"As of now, all our projects are as per the schedule. Global slowdown has indeed made an impact on the investment sentiments in general, but it is too premature to make an assessment of the same on Unitech." But the word is out in the trade that things were not as good as they once were. The completion of many real estate projects has been delayed, as developers are increasingly handicapped by the ongoing liquidity crunch," said Anuj Puri, chairman of Jones Lang LaSalle Meghraj, a global real estate consultancy firm.

He doesn't see an improvement in the situation any time soon.

"There is also not much incentive to find alternative funding methods, since the current quarter represents the lowest ebb in demand for luxury and even mid-income properties in the last three to four years," said Puri. "It is far from surprising that many projects are on hold. We expect matters on the liquidity front to improve within 12-18 months." Anshuman Magazine of CB Richard Ellis, agreed but said there was one more reason for these delays: the way builders expanded work during the boom years. "If they were handling 10 projects earlier, they had 20 more, and this led to delay in completion of projects."

The project encompasses a judicious mix of executive homes, weekend homes & premium villas. The company is pumping in an investment of Rs. 300 crores towards the project.

Mr. Bhim Yadav, CEO, Falcon Realty Services Pvt. Ltd. says "Our in-depth understanding of a consumer's requirements and what should be offered to him has helped us in envisaging the largest Secured, Gated and Master Planned Community Development on Expressway (NH-8) in Delhi - NCR which will provide Self Sustainable, Energy Efficient Green Developments, Luxurious and Affordable Housing, Dynamic Location and a great investment growth plan."

"We have already identified the land and formulated, conceptualized and designed the eco-friendly master planned communities with our diligent team of architects headed by British Principal Architect A. Teelock. We are further looking for more space in tier two cities so as to cater there, the emerging commercial, residential and retail requirements on green footage," he added.

Global Eco-City will showcase the living trends that will come in to vogue. The roof top of the houses will be designed by fitting solar heating systems into homes which is an efficient way to combat increasing energy costs.

It's not surprising, there fore, to see Gurgaon residents up in arms against the administration that has failed to deliver on its promises. However, not all is lost.

A new script is all set to be written with New Gurgaon promising to be a planned and well-serviced proposition. The virgin land offers residential, commercial and institutional real estate opportunities.

New Gurgaon is the nomenclature being used to distinguish planned areas in Gurgaon under the previous Master Plan from the new areas that have been included under the new Gurgaon-Manesar Master Plan 2021. The focus of this plan is on increasing residential space, green areas, commercial space, enhancing the quantum of industrial lands and improving connectivity with Delhi. The new suburb comprises more than 15 new sectors and has exclusive residential and commercial zones.

The suburb is located close to Dwarka and the Indira Gandhi International Airport. There are various proposals for new road links and expansion of existing road linkages between Delhi and Gurgaon. The extension of the industrial areas is planned adjacent to IMT, Manesar, and a SEZ. Developers such as DLF, Rahejas, Vatika, BPTP and Uppal have landbanks in the newly demarcated sectors. Construction is likely to start by next year and people can be expected to move in by 2011.

Prices start at Rs 2000 per square feet.

"The new city will be a comprehensive, engineered and planned development.

Master services such as storm water, sewage, water supply would be in place by the end of next year. The idea is to learn from the mistakes of the past," says G. Anupama, HUDA administrator, adding, "For sectors 58-65, we have engaged consultants for survey work. We would have the full survey done in the next three weeks."

Improving access

Work has already begun on the Northern and Southern Peripheral roads - being planned to decongest traffic on NH8. Known as the Super Expressway Road or the Northern Peripheral, the 17 km long road beginning from Gadhi Harsaru will connect Gurgaon to Dwarka. The eight-lane stretch will also have 30 metres of green belt and two service lanes on either side.

Once the project is completed, traffic bound for Dwarka and IGI Airport from Gurgaon and Jaipur will have the option to skip NH-8. The total width of the road is 210 metres. This link has been notified in the Gurgaon Development Plan. The proposed expressway is expect ed to be completed by the Commonwealth Games 2010.

• Full steam ahead
  
  
• The downside

According to sources, in order to meet the growing demand for houses, around 1000 multi-storeyed dwelling units are expected to come up in various sectors of Gurgaon, tenders for which will be floated in two months.

"We have sent details like availability of land, expected cost and number of plots, to the headquarters in Chandigarh. The formalities will take a month or two and after that we will start inviting applications from eligible registered cooperative group housing societies and welfare housing organisations for the allotment of land," said Madhu Pradeep, senior town planner, HUDA.

Under the scheme, out of over 500 plots of half-acre each, a certain percentage will be reserved for the economically-weaker sections, central government employees and defence personnel, said HUDA officials.

"We haven't yet decided how much area will be reserved for such categories. The general category will include societies or welfare housing organisations comprising members who either belong to Haryana or are residents of Haryana or were working in the state or Chandigarh for the last one year," officials said.

The Project Parsvnath Pragati spread over an area of 13 acre is strategically located in Sector-5 Dharuhera, one of the most developed sectors in the vicinity, having high occupancy level. The expected realization from the project is approx. 210 crore. Parsvnath Pragati is scheduled to be completed within a span of 36 months from the date of commencement of Individual Towers.

"At Parsvnath it has been our constant endeavor to explore opportunities to equip the fastest growing industrial and residential suburb of NCR with state of the art residential projects so that it stands at par with the metro towns. This project will set yet another milestone in upgrading the living standards of the residents. Parsvnath Pragati being constructed with rich specification offers variety of options to its occupants," said Mr. Pradeep Jain, Chairman, Parsvnath Developers Limited.

Parsvnath Pragati has approx 1.07 lac sq. ft of saleable area and offers about 554 units. The project comprising of multiple tower offers ground plus fourteen floors and ground plus fifteen floors. The project would be equipped with three bedroom flats, four bedroom flats with servant room and penthouses.

Does this spell the beginning of a weakening sentiment where sellers feel it is better to sell out and cash out than hold. Predictions are that values may start falling from existing levels over at least the next one year.

Donald Trump has been telling anybody in America who is willing to listen that "If you want a good bargain, and can afford to buy, buy now." So did many of the speakers at the Real Estate Connect conference in San Francisco in July. So does the crash in the global financial markets spell the beginning of the slide in India?

We have a few examples to go with. Take the case of a seller in the upmarket Greater Kailash area in Delhi, for instance. He dropped the price of the 225 sq yd plot by Rs 2 crore, if the money was paid immediately. In this case he dropped prices by almost 20%. The operative point to be noted here is that he wanted the money immediately.

Explains an analyst who does not want to be named, "Today the people who have started selling are those who need immediate liquidity and those who do not intend to stay in the property market for the next year or so when values are not expected to rise."

Also take the case of a premium developer in Gurgaon whose high-end apartments were sold at well over Rs 6,500 per sq ft, while the rest of the market was starting project sales at Rs 4,000. A few weeks ago, the same developer offloaded about 25 flats at a distress price of Rs 5,700 per sq ft, well over its original sale value as the company desperately needed liquidity.

Most of these will be in the luxury segment, including townships and villas.

QVC Realty will operate in 12 markets including such as Mumbai, Delhi, NCR, Bangalore, Hyderabad, Chennai, Kolkata and Pune. It also plans to enter Tier II cities such as Chandigarh, Nagpur, Kochi among others.

The company also plans to develop two integrated township in Gurgaon with Utpal Group and Sobha Developers.

QVC Realty has tied up with Vasu Builders to set up the QVC Green project in Chikmagalur, Karnataka. The firm, along with Sanjay Kakre group, will build residential towers in Pune.

The company launched its first project, QVC Hills, near Bangalore, which involves an investment of Rs 400 crore. Phase I will consist of 100 luxury villas, spread across 26 acres. The total project area could go up to 75 acres depending on the response to the Phase 1 offerings.

Just three months ago, no builder was willing to go on record that they were offering cash discounts to home buyers. The reason: they did not want to give it away that property prices were under pressure.

However, falling sales and rising inventory ove