DLF may scrap Bangalore row house project

With the luxury market showing signs of running out of steam in the Garden City, realtors are hedging their bets with higher play in the low-margin, but high-volume game.

Keeping with the trend, DLF Ltd, India’s largest realtor by market capitalisation, is rethinking its decision to set up 270 row houses spread over 38 acres, a part of the firm’s large development project coming up in Jigani Industrial Area, at a proposed investment of Rs300 crore.

Each row house was to cost anywhere between Rs70-80 lakh.

The company has altered its plan to exploit potential in mid-segment housing that is sensing robust demand.

The focus is going to be on mid-income homes and commercial complexes, with deferment of high-margin launches in luxury homes and retail space, the company said in a statement released early this year.

“People are extremely choosy in the current market scenario. It is always better to be in the mid-segment,” said an official privy to the development.

Row houses were a part of the first phase of the Rs1,000 crore development project at Jigani and were expected to take off early next year.

“There has been good demand for mid-segment residential complexes. Since we have sold larger number of houses in the Bannerghatta project, we are thinking if we can replicate the same,” he added.

However, a final decision on the project is awaited in the next two months.

DLF, recently, repositioned its high-end residential project Westend Heights in Bangalore into mid-income homes to drive volumes. The company was able to sell more than 50% of the 19,623 apartments post-restructuring.

Besides, the realty major has decided to put all projects on hold in Karnataka except for the Bannerghatta residential project.

Opposite trend in Mumbai

Unlike Bangalore, in Mumbai, the premium housing segment is seeing enough traction. Indiabulls Real Estate sold all the slots that were open in the first phase of its residential project Indiabulls Sky at Elphinstone Road.

Indiabulls has launched three residential projects next to its commercial vertical — One Indiabulls Center.

“Developers in Mumbai are claiming that they are doing well. But the slowdown is apparent in the segment that is price-sensitive — between Rs 35 lakh and Rs 1 crore. But sales in premium segment are quite good,” said an analyst with a domestic brokerage, not wishing to be named. Industry experts said that as there is supply shortage in the premium segment in the island city. People who want to buy in this segment are doing so believing prices are still lower compared with the levels in 2007-2008.

- Pooja Sarkar. Mumbai