AJIT JOHN
panjim: The realty market in the state has slowed down and some projects by the smaller builders in the state are being delayed.
However projects by the more established builders are moving ahead on schedule. The state of the market has also resulted in several flats lying empty unsold in various parts of the state, however all of them believe that their fortunes will change in the next six or eight months.
Jose Braganza of B&F Realty said times were tough and it was important to have a plan which many of the builders who had experience in the business were doing. He said “Without a doubt for those who got into the market seeing the fortunes of others improving are builders who are involved in their first project and they are certainly stuck. Many have no money to buy raw materials and work has stopped. They have no access to funds and it gets tough. They are stuck and wondering how they can complete the project. I don’t believe the market is in the dumps but yes we are not living with a market that consumes what we create readily.”
A sentiment shared by Liaquat Hussain of Heritage Princess who felt the market was good and he had no problems selling his projects.
Desh Prabhudessai, president, Credai Goa chapter however was forthright when he said the market was in a slump. He said “Several projects have been delayed due to the slump in the market and there are several small builders who are in very poor shape because they did not really understand the challenges ahead. The big builders yes have the financial backing and some of them are going ahead with their projects but it is based on careful planning because they know that in this market their flats will not sell as fast as it did three or five years ago.”
Asked how many flats were possibly lying empty in the state he said it would not be possible to answer but felt it was quite possible that approximately 50,000 sq mtrs lying unoccupied in the state. Asked when he expected this market to improve, he said it would be a while before that happened.
The domestic buyer was not buying flats in the state given that the value of properties would not increase as dramatically as they would in the other metros. With regards to Goans these flats were too expensive and given that salaries in the state were not very high, flats in the Rs 40 lakh were expensive. Given the cost of buying land in the state it was difficult to reduce cost thus leaving everyone in a catch 22 situation.
The situation that Goa’s finds itself in is not unique. In the rest of the country projects worth Rs 9 lakh crore in the construction sector were stalled due to weak macro-economic environment and prolonged delays in getting clearances and land acquisition, in a report released earlier this year by ICRA.
“The Indian construction sector over the last few years had faced challenges arising from weak investment cycle and delays or uncertainties in policies leading to weak order inflows as well as slowdown in execution. As of 30 June, projects involving investments of Rs 9 lakh crore were stalled,” the rating agency said.
Commissioning of projects also witnessed a decline from Rs 3.6 lakh crore in FY13 to Rs 2.2 lakh crore in FY14. Similarly, new project announcements declined by 17 per cent in FY14 led by sharp contraction in private sector projects owing to subdued business confidence and inordinate delays in getting approvals.
Delays increased the uncertainty on the projects’ viability and also reduced the risk appetite of developers. ICRA said besides held-up projects, there are sizable projects which are slow moving or facing some implementation issues including prolonged delays in getting clearances, as well as difficulty in land acquisition.
“There have been several sector-specific concerns which have impacted investments in new projects as well as implementation of on-going projects,” ICRA Senior Vice-President Rohit Inamdar said.
According to ICRA, the power sector accounts for an major share of stalled projects, even though the government has taken several policy actions in the past couple of years. “The sector has been facing difficulties in getting coal and gas as well as long term power purchase arrangements amid poor financial health of state utilities. Additionally evacuation, transmission and logistic bottlenecks have also dampened new investment environment,” he said.
Well Goa will hope the good times come a rolling or as a builder said “ we will have to find new professions.”
