Business falling brick by brick for Noida demolitioners with rising cost and competition
Jan 23, 2014
Source : The Economic Times


NOIDA: With the overall real estate activities seeing a low in the Delhi-NCR region, many Noida-based building demolition contractors are also feeling the heat. The standalone demolishers stated declining business, spike in the running cost and competitive market to be primary reasons.

Giving specifics about the industry, some players in the know-how said there are close to 150 standalone demolition contractors in Noida alone and over a thousand in Delhi-NCR.

Orders for demolition have reduced by 50 per cent in last one year. From an average of 10 orders per month, we are getting just 3-4 orders now," lamented Sanjiv Chauhan, director of Noida-based Akash Demolition Contractors. The decade-old company is a small-scale player with just 4-5 machines.

"We take orders of demolition of small buildings (4-5 storeys). Charges taken on per square feet basis. We charge Rs 50 per square feet and so the cost of demolishing a building, spread over 10,000 square feet area is Rs 5,00,000," informed Chauhan giving tentative idea about the money being lost because of reducing orders.

VK Agarwal, director of Satveer Contractors shared a similar experience. "We have had no projects in last last 3-4 months. Our annual turnover is expected to go down by over 25 per cent."

Real estate experts and property consultants have attributed several reasons for the downfall.

Mudassir Zaidi, regional director-North, Knight Frank (India) said, "Demolition work where builder floors are demolished to rebuild have gone down by 33 per cent is the main reason for business decline." He also added that Delhi has been the major market for contractors, as new construction activity was taking place only in case of Brownfield expansion. "NCR has primarily seen Greenfield expansion," he added. Brownfield expansion is, where existing structure is brought down, to raise a new one, while in Greenfield expansion, constructions take place on a new plot.

Small-time contractors pointed out that big construction companies have now created their own demolition division so that they don't have to outsource work to them. Ayub Khan, proprietor of Ahmad Demolition Contractor said that he has not got any project for last four months. "We are a small company and rely mainly on reference but with condition of real estate activity skewed, our condition has deteriorated further."

Jitendra Singh, a Noida-based property consultant said, "Real estate activity has gone down by over 20 per cent in last one year, with very few new projects coming. Land has not been allotted for new construction for a long time now. I don't see the situation improving till elections and may be even after that." The cost of running the enterprise has been increasing said many players. "Labour is very expensive as it requires a lot of physical work." The orders are primarily random demolition or brick by brick demolition. "A lot of skill is required in the latter one where one has to take care of glasses, frames and even bricks etc which are to be reused. "Cost of office space, staff and other overheads is pinching at a time when projects are far and few."

Players like Murshad Alam, (who had a company under the same name till recently) have given up the business. He now runs a small garment business.


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