Large builders opt for town­ships as small firms exit

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Mad­hurima Nandy and Bidya Sa­pam ht­spe­cial­pro­jects@ht;

Smaller and re­gional de­vel­op­ers are slowly opt­ing out of build­ing town­ships be­cause of fund­ing chal­lenges, scarcity of land and strin­gent reg­u­la­tory norms, leav­ing a few large firms to rule the space. Due to the on­go­ing slow­down, many mid-sized de­vel­op­ers have tried sell­ing off land and in­com­plete town­ship projects to larger coun­ter­parts, as they con­cen­trate on smaller projects.

Gaur­sons In­dia, based in the Na­tional Cap­i­tal Re­gion (NCR), has al­ways been into de­vel­op­ing town­ships but may not take up new projects of large sizes any more. Man­ag­ing di­rec­tor Manoj Gaur said he wants to build smaller projects of 10-12 acres that can be com­pleted in 3-4 years. “Large land parcels are not avail­able to­day. The fi­nan­cial model has changed, and with RERA, projects have be­come time-bound,” Gaur said.

There was a town­ship boom in 2005-06 but fewer de­vel­op­ers want to build them now. At least three de­vel­op­ers (who didn’t want to be named)— one from Pune and two from the Na­tional Cap­i­tal Re­gion (NCR), said they have been in talks to sell their pro­posed town­ship projects in parts as land or as a whole. “The ini­tial cost of kick-start­ing a town­ship is huge. The builder must pro­vide over­all in­fra­struc­ture and not all town­ships even­tu­ally make money,” said one of them. “Ear­lier, im­ages of the fully built town­ship were re­leased first,” said Ashutosh Li­maye, head (re­search) at prop­erty ad­vi­sory JLL In­dia. With RERA, de­vel­op­ers have to an­nounce the com­ple­tion date at launch, so they launch only a por­tion so they have more con­trol on the con­struc­tion ac­tiv­ity.” Most town­ships to­day fo­cus on af­ford­able hous­ing. The new crop is also try­ing to give them a dis­tinct theme mak­ing them tech­nol­ogy-en­abled, and in­tro­duc­ing con­cepts like stu­dent and se­nior hous­ing.

Mark­ing its en­try into mid-in­come hous­ing, Em­bassy Group re­cently launched the first of five phases of its 283-acre town­shipin Bengaluru. The flats are be­ing mar­keted as smart homes, in­te­grated with Ama­zon Echo de­vices. “The high in­vest­ment needed for land ac­qui­si­tion, lengthy ges­ta­tion phase and long-term com­mit­ment of funds have cre­ated an en­try bar­rier, which only large de­vel­op­ers can scale,” said Reeza Se­bas­tian, Em­bassy se­nior VP, res­i­den­tial busi­ness.

Shapoorji Pal­lonji Real Es­tate is in the process of ag­gre­gat­ing 1,000 acres be­tween Mum­bai and Pune to build a mas­sive town­ship, cur­rently be­ing con­cep­tu­alised. CEO Venkatesh Gopalkr­ish­nan says th­ese projects need a theme. “It will be built in the next decade, in phases, around a theme,” he said. “Master-plan­ning of town­ships needs to be well-thought, with right po­si­tion­ing and prod­uct mix. Done right, it builds value.”

Mo­hit Mal­ho­tra, MD and CEO, Go­drej Prop­er­ties , says town­ships are com­plex to ex­e­cute and need“fi­nan­cial and ex­e­cu­tion ca­pa­bil­i­ties and or­gan­i­sa­tion al sup­port” that smaller play­ers strug­gle with

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