Futuristic dreams harbored by real estate developers, of building castles with cheap credit of 2007 in the market, and leasing them to desperate home and office owners, are now beginning to face reality that in the end, there is indeed no free - or cheap - lunch.
This is borne out by the fact that is that real estate developers in Mumbai and even the rest of the country are now pushing outright sales of their commercial properties - offices, retail stores, hotels - instead of leasing them out. These were the same companies who were hoarding apartments in the hope of selling them at astronomical prices.
In some areas of say Mumbai city, residential and commercial spaces skyrocketed 300% as investors became intoxicated in the highs of investing in real estate. Overnight, even menials were dishing advice to their owners, having seen their slums jump up to crores in value, as companies aquired their lands to build towers and further sell them to occupants and investors.
Those dreams however appear to have fizzled out, the impact of which will become glaring by 2009.
Developers today are ready to sell properties at a rate which is seen attractive by buyers today. Their focus is now on purchase, build and sell off for immediate gains, instead of holding back on structural space and leasing them instead.
For example, Raheja Corporation has started selling off its office spaces in PUne, Hyderabad and Navi Mumbai. Even subsidiary Raheja companies are following the same strategy in Mumbai.
Another real estate company, Indiabulls Real Estate, which saw a meteoric rise in 2007, has recently started selling their office spaces located on Tulsi Pipe Road, Jupiter Mills and Elphinstone Mills.
Its pride construction, the One Indiabulls Center, which was built to have expensive leases on office space, is now being sold off piece by piece, according to reports in the market. Even Ashok Piramal group's Peninsula Land Ltd (PLL), which is developing commercial buildings in Ashok Gardens - a premium residential project comprising 2-, 3-, 4- and 5-bhk (bedroom, hall, kitchen) apartments located at upper Parel in Mumbai - is selling off the commercial building instead of leasing the property.
Peninsula Land, which had sold off 5 lakh sq ft of Dawn Mills, is now in the process of selling complete 19 lakh sq ft. Realty major, DLF too is in the process of selling a part of its big commercial establishments instead of leasing. Competitor, Hiranandani Constructions is understood to have not entered into a single land deal since the past few months.
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