‘Housing Project Launches Across Top 8 Cities Drop 31% since Dec 2010’

The widening gap between demand and supply of apartments has put the brakes on the launch of new housing projects across the country — home project launches across top eight cities have dropped 31% since the September-December 2010 quarter, says real estate research firm, PropEquity. Across cities, the overall number of housing projects being launched has dropped significantly. In the September-December 2010 quarter, 128,405 units were launched while in the April-June 2011 quarter this figure was down to 75,239 units. New launches were also impacted by problems over land acquisitions in the Noida-Greater Noida areas, near Delhi, as well as an increase in loan rates by the Reserve Bank of India (RBI). 
"Also developers have already sold more than they can execute, so now they are controlling new launches," says Samir Jasuja, chief executive officer of PropEquity. In the last three quarters, the share of plotted developments in the overall number of project launches has gone up from 4% to 12%. 
In its analyst presentation in May, India's largest real estate firm DLF had said that it would focus on selling plots to reduce execution risks that come with developing group housing projects. In June this year, the company launched a 101-acre integrated township Garden City in Gurgaon where it sold 400 plots, raising . 700 crore in just one day. 
"A number of developers today do not want to invest money at this point of time but want quick returns that plotted developments offer," says Jasuja. In the last few months, companies like DLF, Omaxe, BPTP, Logix, Supertech and others have launched new projects selling plots. 
At the moment, over 50% of projects for Omaxe are plotted developments. "Of the 2.6 million sq ft that we sold in the last quarter, about 1.7 million sq ft was in plots," says Sumit Arora, vice president, investor & strategic relations at Omaxe. Developers say that sales of plots are still robust in the country, especially in the north as investors 
feel this is a safer bet in today's environment. "We develop townships and selling plots gives a good velocity to sales in the overall project. It also gives us good and quick cash flows as compared to doing high rises," says Dinesh C Gupta, assistant vice president, investor relations at Ansal API. Such a plotted development also protects these companies from inflationary pressures as buying large quantities of cement and steel, that are required for group housing projects, can be avoided. A typical group housing project takes between 24 and 36 months to be completed compared with a period of 12 to 18 months for projects selling plots.