Friday, July 01, 2011

Realtors in Noida hit by shortage of funds

Banks stop funding realty projects

              The Controversy over land acquisition in the national capital region (NCR) has dealt another blow to developers in the region with banks stopping funds to the realtors citing uncertainty of the projects.
              Worse still, even private equity (PE) firms and nonbanking financial institutions are in no mood to lend to the beleaguered developers because of the uncertainty surrounding their projects.
              This comes on top of construction work being stopped at many sites and customers refusing to pay installment due, thus choking the money flow for the projects.
              “The situation is not very encouraging for developers and is taking a toll on our finances. The banks are refusing to lend us till the status is clear,” the chief financial officer (CFO) of a leading NCR developer told on condition of anonymity.
              “The Noida land row is already hurting our finances. The construction work has stopped and the people who have already booked flats are refusing to pay further installments till the position is clear,” he added.
              “This is a really difficult situation for developers. We bought land from the authority, so we were not responsible for paying compensation. Now when the project is going on we are suffering because of the fight between the authority and the farmers,” said Pankaj Bajaj, Managing Director, Eldeco Infrastructure and Properties.
              All we can ensure is that the money of the customers are safe with us and in case if there is any problem we will refund their money,” Bajaj added.
              At most of the project sites, construction work has started.
              Some are even nearing completion.
              However, Bajaj said that the controversy may delay the completion of the projects.
              Greater Noida alone accounts for more than 70 per cent of the total home sales in the NCR. Developers assert that only a small portion of the projects fall under the disputed area. But despite this the overall customer sentiment has turned negative.

  • The land acquisitionrelated problem in the NCR has gone from bad to worse with banks, private equity ( PE) firms and non- banking financial institutions not extending funds to developers in the region citing uncertainty of the projects
  • However, developers assert that only a small portion of the projects fall under the disputed area. Despite this, the overall customer sentiment has turned negative