DLF, Unitech face delays as another slump looms

Real estate developers have another slowdown staring them in the face as interest rates and input costs spiral, causing delays in recently launched projects.

This comes even as the players grapple with delays of over two years in projects launched between 2005 and 2007.

Indeed, most of the projects launched in the National Capital Region (NCR) between 2005 and 2007 are yet to be completed. These include DLF’s Magnolias and Belaire in Gurgaon, Parsvnath’s Exotica in Gurgaon and Palacia and Privilege at Greater Noida. Unitech has also seen construction delays in two of its projects — Escape and The Close — in Gurgaon.

“We are trying to complete the two by the end of this year,” a DLF spokesperson said on the company’s delayed projects.

A Parsvnath official said the company is targeting completion of its two Greater Noida projects by end-2012. “In case of Exotica project in Gurgaon, even though there were delays, we have completed possessions in the first two phases. We are currently offering possession in the third phase. And in six months, we will start providing possessions in the fourth phase.”
A Unitech spokesperson said the company has already offered The Close (North) for possession. “Of the total 16 Towers, 14 towers have been offered. Also, more than 500 families have occupied their apartments and many others, who have taken possession, will move in soon. The remaining towers will be offered for possession in the next few months. Similarly, for The Escape as well, possession has already started and is happening in a phased manner.”

Developers blame the delay on the 2008-09 slowdown, among other factors.

“During the slowdown, all the projects were impacted. Other factors such as lack of construction workers due to Commonwealth Games last year and the National Rural Employment Guarantee Scheme have also contributed to the delays,” said the DLF spokesperson.

The Parsvnath official dittoed: “Almost two years were lost to the recession. Customers defaulted and even the banks that had committed us funds also took a backseat. We were pitted against odds.”

The lessons seem to have been learnt well.

DLF has put in place a system of pre-launch checks and balances.

“As a policy, we have decided that launches will be done only after all the required approvals from the concerned agency have been taken,” the spokesperson said.

Parsvnath has started taking dedicated loans for projects.
Unitech, on its part, has jacked up manpower for speedy implementation. “Unitech has ramped up the construction activity significantly during the last 24 months. Workforce deployed at sites increased nearly six-fold from 3,500 to about 20,000-plus,” its spokesperson said.

But just as the going appeared to be getting better comes the likelihood of another slowdown, what with interest rates and input costs shooting through the roof.

According to real estate research firm Liases Foras, the incremental construction in the NCR was 35 million sq ft 2010-11, down 39% from 58 million sq ft in 2009-10.

Also, around 1,60,000 residential units across segments will see delays during 2011-13, going by PropEquity, a real estate intelligence firm.