The slowdown coincides with rising loan defaults by retail customers and small enterprises, which have been hit by a steep rise in lending rates. The resource scarcity has changed the priority of investors. They want to remain liquid and not commit their funds to the long term.
The retail arm of the Mukesh Ambani-led group had almost halted its expansion plans as a credit crunch roiled markets across the globe forcing companies to withhold new projects. The company also froze fresh recruitment.
Six infotech special economic zone projects of the Unitech Group, which owns the country's second-biggest real estate company, have been delayed by as much as three years owing to slowing demand and delays in government approvals, sources said.
After launching mid-income houses, real estate companies are now targeting low-priced homes in the sub-Rs 10 lakh (Rs 1 million) category to improve cash flows and beat the slump in the property market that has been driven by high borrowing rates.
Retailers, who are already reeling under the economic slowdown, were forced to keep their shops shut in the southern and central parts of Mumbai as terrorists holed up in plush hotels and buildings of the city continued to battle military commandos.
Several malls and retailers downed shutters in the commercial capital city of Mumbai. Kishore Biyani's hypermarket chain Big Bazaar closed two stores its stores in Mumbai Central and Parel, which are half-an-hour's drive from South Mumbai.
At least 35 per cent, or $400 billion worth of goods, that are sourced from China could shift to countries such as India, Thailand, Vietnam among others over the next 10 years, according to a study by US-based retail and supply chain solutions firm DCB and Company. India is expected to take the lion's share of volume shift compared to its counterparts in the region, the study says, due to its IT prowess, infrastructure and agents network.
Even though the Reserve Bank of India (RBI) has reduced the risk weightage on loans to commercial developers and cut general provisioning for commercial real estate, commercial banks may not start lending to the sector immediately.
At this time of fear and apprehension over jobs, public sector banks are swimming against the tide to go on a hiring spree.
Kerala-based private sector lender Dhanalakshmi Bank plans to recruit close to 400 employees, almost one-third of its present strength, to build up the existing team to tap more business
Many companies and their executives are seeking solace from new-age motivational gurus.
With store rentals dropping as much as 35 per cent in the last one year, retailers say opening stores in certain locations has become profitable. As a result, some retailers plan to roll out their bigger format stores and others are booking retail spaces that will come up in two years at a much lower cost.
Most banks are going slow on clearing such loan applications as the employment scenario has turned adverse due to the financial crisis faced by most companies.
Within months of charging the moon, Indian real estate firms are now offering buy-back of properties, free cars and even free apartments to tide over the current slump which has seen sales halve from the beginning of the year.
At a time when most retail firms have either gone slow in opening new stores or closed down some to beat the ongoing slump, the Future Group has opened nearly 150 stores across all its formats over the past three months. This month alone, Biyani is opening 15 stores, mainly selling electronic and lifestyle goods.
The JV was expected to open 56 exclusive high-end stores for the four focus brands, Miss Sixty, Energie, Killah & Murphy&Nye, in the top 10 cities in the first three years. As per the original plans, Darshan Mehta president and chief executive of Reliance Brands, was to spearhead the JV with separate business heads for each of the four brands.
Last year, Trent had entered into a tie-up with The Xander Group wherein Xander was to invest in malls along with local developers and Trent was to be the anchor tenant. Currently, three-to-four such malls are being developed in cities such as Surat and Ahmedabad.
It is mission damage control and ICICI Bank is pulling out all the stops. Weighed down by persistent rumours over its health, the bank's top management will meet senior employees on Monday to reassure them about their future.
The land development arm of the railways has cut the reserve price for a 45,371 square metre plot at Bandra, a Mumbai suburb, by nearly 14.5 per cent, to Rs 39.60 billion and reduced the minimum networth requirement for bidders by a similar margin. It has also reduced the bid security amount by 20 per cent. This apart, the authority has more than doubled the payment period to five years.
Most realtors are already advertising cash discounts of 5-10 per cent on upfront payment and buyers can get up to 25 per cent discount if they book properties and are willing to wait for two to three years until possession. According to consultants, developers may even give 15-20 per cent discount on the price as they are eager to clear inventories.
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