Instead of maximising returns from one project, developers were looking at moving from one project to the other. As cash was constantly required, many of them sold their projects too early. I am not sure if the developers believe in their own projects as they should.
If you look at the development of the Indian real estate market, DLF made its money in Gurgaon working there patiently for 20 years. The Hiranandanis made their money in one suburb of Mumbai over 15-20 years. They maximised the value of each project before moving on to another one.
You can make a couple of billion dollars by working at just a few projects. Large projects take time and require solid project management skills. If you are doing large projects, you must be prepared to go through a downturn. The 20 million square feet Canary Wharf project in London was conceptualised in 1987 and is still being done. Developers in India think such projects are easy. They aren’t.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.