Rajkot Real Estate Sector Grapples with Severe Liquidity Crisis
The real estate sector in Rajkot is facing a severe liquidity crisis, which has persisted for the past two years. This crisis is reflected in a sharp decline in projects registered with the Real Estate Regulation Authority (RERA).
Key Factors Contributing to the Crisis
- Global Economic Volatility: Profits in industries in the region have been affected by global economic uncertainty.
- Investor Shift to Commodities: Investors have shifted their funds to commodities such as gold, silver, and copper.
- Bankruptcy of Key Financiers: A large volume of money has vanished after the bankruptcy of key financiers.
RERA Data Highlights the Slide
The number of registered residential and commercial projects has dropped significantly over the past two years:
- 101 projects in 2022-23
- 79 projects in 2024-25
- 68 projects in the current financial year
The Role of Non-Conventional Finance
Rajkot's real estate market relies heavily on non-conventional finance, with only 15% to 20% of project funding coming from banks.
The Impact of the Crisis
- Poisoned Industrial Belt: The industrial belt around Rajkot, including Shapar, Metoda, and Morbi, has been affected by stress in the industrial sector.
- Shift to Commodities: Investment shifted to commodities during the boom phase, but metal prices fell drastically.
- Collapse of Financiers: The core of the liquidity crisis lies in the collapse of several large financiers, with an estimated Rs 2,500 crore to Rs 3,000 crore believed to have disappeared from the market.
New Strategies for Builders
Builders are forced to find new ways to acquire land, with a rise in land barter deals:
- Builders give a farmer land in other villages in exchange for land near Rajkot.
- Builders pay about 20% to 30% of the price in cash.