Krrish; Getting Crushed? (Infographic)

The Krrish project has been making waves, if only for its absurd proportions. The complex’s tallest tower is going to be the third tallest residential tower, are you ready for this? In_the_world. I hear three quick bangs on a bell; the crowd goes wild as the fighter in the right corner shrugs off his glittering robe. All hail the Krrish project, destroyer of third world woes.

But seriously. I snooped around a bit (and by now this is relatively common knowledge) and found that Krrish doesn’t really have any completed real estate projects anywhere in the world. Closest thing they have is a few projects underway in Guragon, India. As a company laying claim to such a massive venture, Krrish has virtually no media mentions in India, and its only ties to solid listed corporate are a claim to own a stake in Cobra Beer. And in fact Krrish is better known for its brewery business than anything else.

It’s projected to bring about $560mn into the country. But that number exists only on paper. In reality these projects bring a fraction of that amount, usually 10%, and try to source the rest locally. Krrish, which hasn’t started building yet, is rumored to only have brought in $5mn, as a 10% down payment for the value of the land. The completed project will have some 750 apartments plus equal amount of office spaces, each of the apartments are priced at roughly a million dollars.

The plan is to pre-sell them to raise money to build.  But as you can see from the chart below, demand for apartments hasn’t exactly been booming. If demand does not meet supply, the project will have to be abandoned. Far worse though, is the prospect of the project being bankrolled by a country eager for any kind of investment (especially something with a result so grandiose) ending up with the local banking system owning roughly $500mn of bad loans. And this will probably at the very least result in a major banking/debt crisis for the country. Just putting some thoughts out there. What does everyone else think?

krrishh

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7 comments
  1. Johan said:

    I was thinking the same thing. I pass by there every day, and apart from putting up a fence, nothing seems to be happening. It seemed rather grandiose to begin with. Shangri-La on the other hand, seems to be busy building.

  2. Good point Halik, it’s a simple matter of demand and supply here which has me scratching my head as well. I personally can’t believe there are enough takers for such expensive apartments in the city. Even the uber-rich can only get you a few reservations at best; what about the other 700 empty million dollar apartments? Sounds like a disaster waiting to happen, or a grandiose plan that won’t.

    • See my comment below. As long as the politicos and cronies keep putting their black money into flats the deamdn for high end ones will continue. The moment that stops the high end market will crash.

      The low and mid end are dead anyway, the middle class has been wiped out.

  3. Good point there. A friend – who can afford one – had inquired about the apartments and the asking price for a standard one was Rs. 90 million, and the representative had also added that they were planning to give/sell some units to Indian celebrities; Aishwariya Rai being a name mentioned.

    • That is apparently the general tactic in India. Give one to a celebrity and other people will flock around.

  4. Shamindra said:

    A fact … The Krrish BOI agreement prohibits them to borrow locally, so no SL bank will end up with this dud loan. But I’m guessing some bank somewhere else will.

  5. The rumour that I heard was that they had presold about 50% to Indians who wanted to use it to launder black money. Most of the flats being sold here are being bought for that purpose by polticos, their fronts and cronies.

    Heard an excellent comment by a local businessmen who has created his own share of start-up ventures: where is the FDI coming from ? The only players are the “Indian Wildcatters”; who are the only ones prepared to pay the level bribes needed to get in. The businessman is concerned is not starting anything new, he says although he has some political connections he’s not prepared to bumsuck to infinity in order to do business, so he’s semi retired at the age of 40, just running existing businesses.

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