Realty Woes Spiral

A total of Rs 4,64,330 crore worth of housing projects are stuck across India owing to several factors like liquidity crunch faced by the developers over the past five years, delay in getting clearances, land disputes, etc, a report by Anarock Property Consultants said. Although Maharashtra has the maximum number of projects registered under the Real Estate (Regulation and Development) Act, 2016 (Rera), the state also tops the list with most number of residential projects getting stuck or delayed under the Mumbai Metropolitan Region (MMR), the report added. The National Capital Region is a close second with several projects being delayed.

The delayed projects continue to be in sizeable numbers, even though it has been over a year since the launch of real estate regulatory. One of the biggest fear factors amongst the homebuyers has been the prolonged project delays.

“If we add up the numbers for the top seven cities, it emerges that the residential real estate launched in or before 2013 that is stuck in various stages of (non) completion, is collectively worth a whopping Rs 4,64,300 crore for a total of 5,75,900 units that are yet to be delivered to the respective homebuyers. This is apart from the other inventory under construction which, judging by visible construction progress, will assuredly get delivered over the next 3-4 years. These 5,75,900 units have been stuck since 2013 or before,” said Anuj Puri, chairman, Anarock Property Consultants.

The collective approximate value of highly-delayed units in the MMR (Rs 2,34,000 crore) and NCR (Rs 1,26,000 crore) is a whopping Rs 3,60,000 crore. On the other hand, Hyderabad has seen the least project delays during the period, with around 8,900 units worth Rs 5,500 crore delayed since 2013 or before.

“Once the developers got into the liquidity crunch trap, it became difficult for them to come out of the mess. As a result, there were job losses within the sector apart from non-payment of dues to different vendors. The rate of bill settlement through barter went up wherein a realtor allocates an apartment to the vendor against the pending bill amount,” said another property expert.

At the same time, developers hoped that things would gradually normalise and there will be a reduction in project delays following the passage of Rera Act.

Another industry player told DNA Money that “The day Rera came into the picture, those developers and landowners without a clear title started getting into either joint development or joint venture or some other model to avoid being penalised. Thus, consolidation is what we are witnessing now and this will only increase in the next couple of years for these many delayed projects to get ready. Once this set of pre-2013 delayed projects are through, the sector would largely become an organised industry.”

“However, Rera policies have been flouted across many states where several projects that have been ongoing since years and, thanks to the dilutions, do not come under its ambit. For instance, in Karnataka, all projects that are completed 60% or more are currently exempt from Rera purview. This is significant since maximum project delays occur post a project’s major structure formation and during the time of final finishing. To this extent, Rera may be effective in freeing only a limited amount of the stuck inventory. In short, despite Rera, buyers are still at the mercy of the developer’s actual intent to deliver in many cases,” read Anarock Property Consultants report on the subject.