|
The Puravankara group, a premier real estate development company, has reduced its bench strength by almost 20 per cent.
The move has affected both employees and the on-site daily wage labourers.
"We don't know what will happen next. Every other day someone is sent home and there is no job guarantee anywhere. May be tomorrow I will have to leave," said a worried employee of Puravankara.
When contacted, HR sources in the Puravankara group said, "Yes, we will have to reduce our bench strength and salaries too. But as of now we can't say much."
This is not the only case. Others who have been shown the door are not willing to talk about it.
Small real estate companies are cutting recruitment costs incurred in brand building exercises, and are using video conferencing instead of flying in prospective candidates. They are even delaying joining date for campus hires.
Allegedly, Sobha Developers, another leading realtor, hasn't paid its employees for the last three months.
When contacted, an official in Sobha Developers said, "No, that's not true at all. We have paid all our employees and there is going to be no lay offs."
But that is only one side of the story.
"I've been having a very bad experience with Sobha Developers. I booked an apartment in a North Bangalore project based on the good experience that a few of my friends had with them. But after signing the agreement now, they have not turned up to finish rest of the work," complained S Mallik, an unhappy customer.
This shows how it has affected both the employees and the consumers alike.
Cutting the flab
It's all happening because of the spiralling rupee. Companies are now resorting to harsh methods such as cutting salaries, reducing perks and laying off a large chunk of their workforce.
"The market is definitely down but if nothing is done, the situation might get worse. Foreign investors who rushed into India with dreams of quick profit coupled with infinite impulse response (IIR) can buy their return tickets. Indian markets will only yield lower than their expectations from now on," said Pushpendra Dhansoia, a real estate consultant.
In the real estate business, there are reports that some of the smaller companies have had to borrow at 36 per cent interest.
Market status
"The smaller businesses are facing difficulties. If the situation continues like this for six months, they will be wiped out," said Younus Khan, HR manager, Prestige Builders and Developers.
Asipac's study on residential real estate market behavior shows buyers will trust only those developers who have a proven record of delivered projects. And the buyer is definitely becoming far more mature, and doing more pre-purchase research than before.
Financiers wary
Even the financiers are thinking twice before lending money to the real estate sector. They fear that many will default in the December quarter or even earlier.
Big builders are in fact already defaulting and creating a lot of problems for the financiers.
The crisis, which originated with the collapse of some of the biggest investment banks and insurance companies in the US, has now spread far beyond. Europe and the Asian economies have been affected by the biggest crisis since the Great Depression.
What next?
>>Many fly-by-night operators are likely to disappear from the market.
>>Developers need to broaden their product offerings soon; else they may run the risk of huge losses and even bankruptcy, like in 1996-97.
>>Land prices in most Bangalore suburbs will continue to soften
>>Asking rates in the East, Southeast and South to come down by as much as 10-25 per cent. | 
