Business Today

A Buyer's Market

Green shoots emerge for residential real estate, but it isn't out of the woods.

Half an hour before scribes and cameramen landed, three posters are put up at the basement hall of a Noida hotel. In the centre is a large horizontal one, in saffron, white and green background. It has 31 clenched fists printed; the messages are in bold fonts.

'92% of the homebuyers voice POSSESSION'.

'We demand quick delivery of our homes'.

'Delay compensation'.

'New builder with strong financial strength.'

'No Japyee (JAL)'.

'No Liquidation (JIL)'.

JAL and JIL are related. That is at the heart of the problem.

Jaiprakash Associates Ltd (JAL) is the promoter for Jaypee Infratech Limited (JIL), which developed the spectacular 165 kilometre long Yamuna Expressway connecting Noida and Agra. JIL also promised spectacular houses along the Expressway "planned, integrated, modern residential" cities and those that include "landscaped parks, gardens, multiple clubhouses with swimming pools, fitness, recreational, institutional facilities, amenities and commercial developments".

People rushed to book. Parent JAL was a reasonably known name in the echelons of corporate India with businesses in engineering & construction, power, cement, hospitality, IT, sports, education, besides roadways and real estate. In the minds of homebuyers, it was "too big to fail".

JIL's website, which hasn't been updated in years, boasts of its success in selling: "Our company's projects at the Jaypee Greens development at Noida include Jaypee Greens Klassic and Jaypee Greens Kosmos and Jaypee Greens Kensington Park, which are located in 'Jaypee Greens Wish Town', while our Jaypee Greens Aman development is located nearby. Collectively, these developments were approximately 88 per cent sold on a square foot basis as of March 31, 2010, and we expect to commence handover of completed units by 2011."

JIL borrowed from banks and other institutions, mopped up advances from homebuyers before starting construction. A majority of homes, however, still remains unfinished even after seven years.

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