Hyderabad Realty in 'freeze' mode
Hyderabad Realty in 'freeze' mode
Despite a recent drop in the prices of steel and cement, the construction sector in Hyderabad is facing a major business crunch thanks to the meltdown again. Work on all malls and residential complexes that were supposed to come up in the city within the next few months has either been slowed down or temporarily stalled. Developers admit that the number of bookings for residential apartments they would get in a month are now stretched over six months. And the malls that are now ready are sporting vacant floors and ‘To Let’ boards. But it is the under construction buildings of the city that now stand still in time. According to industry insiders these projects will now see a minimum one year delay in their completion. “The two main components of any construction firm is its machinery and manpower.
Most firms these days buy very expensive machines which if not put to use regularly incur huge amounts of loss. So just to keep these working, the firms are not putting off any project completely. But yes there has been a tremendous slowdown in their work flow,” says architect Srinivas Murthy. Predictably, the axe has fallen on a large numbers of skilled workers to help developers cut costs. While medium and small sized construction companies have adopted the slowing down process due to the lack of liquidity in the market, the fairly bigger names have opted to accept deferred pay cheques. This arrangement has helped construction firms to retain their employees and also to keep their equipment running consistently so as to avoid major losses. Though developers like Prajay who plan to kickstart three fresh residential projects early next month are confident of finding buyers for all of them, they do not deny that the process this time round is not going to be as smooth as it used to be earlier.
“We provide very economical deals and, therefore, do not see any dearth of bookings for our forthcoming projects. But like in previous times when our bookings would be full within a month of announcing the project, this time I think it will take at least six months before that can happen,” says Ravinder Reddy, director (Operations) of Prajay. However, Biswajit Patnaik from the retail division of JLL Meghraj is not sure if buyers at this stage would put in their money on a project that has not taken off yet. “Nobody has surplus cash to invest in something that is in its initial stage. They would rather buy a finished product. So even if there is no steady flow of buyers, there are at least some takers for completed projects. But none for the ones that are still in the drawing board stage,” says Patnaik. This is perhaps also explained in the fact that banks are no longer extending home loans for buildings that are in their initial stages of construction..........
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