Over 70% realty projects in Gujarat face delay: ASSOCHAM

The trend mirrored the national trend where over 75% of the total real estate projects in India remained non-starters as of FY15

The slowdown in realty market and almost stagnant sales saw 74 per cent of real estate projects in Gujarat remaining stuck in the financial year 2014-15, stated a recent study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). The trend mirrored the national trend where over 75 per cent of the total real estate projects in India remained non-starters as of fiscal 2014-15.

According to the ASSOCHAM study, which was titled 'Real estate investment: State-level analysis', real estate projects stuck in Gujarat are facing maximum delay of about 38 months.

However, the sector continued to attract investments from private investors. "Gujarat has attracted about 14 per cent of the total investments worth over Rs 12 lakh crore attracted by real estate sector from private investors (including both domestic and foreign) as of FY 2014-15 and has managed to increase its share by about 10 per cent during the last decade in this regard," the ASSOCHAM study stated.

In comparison, the states of Maharashtra and Uttar Pradesh (UP) remained ahead of Gujarat with 22 per cent and 16 per cent share respectively in private investments even as the three states together accounted for over half of the total investments attracted by real estate sector from private investors.

While UP has managed to increase its share in investments made by private players in real estate sector from 0.1 per cent in financial year (FY) 2004-05 to 16 per cent in FY15, however, share of Maharashtra in this regard has decreased from 25.5 per cent to 22 per cent.

Within Gujarat, private players accounted for 92 per cent share in total investments attracted by real estate sector.

Of the total investments worth over Rs 14 lakh crore attracted by real estate sector across India in FY 2014-15, private and public investors accounted for a share of about 85 per cent and 15 per cent respectively, highlighted the study prepared by the ASSOCHAM Economic Research Bureau (AERB).

"Improving macro-economic conditions, enabling policy environment, recovering demand, attractive valuations and increasing capital requirements of the real estate sector have lured the private players over the years," said D S Rawat, secretary general of ASSOCHAM.

Meanwhile, Gujarat attracted seven per cent of the total real estate investments worth about Rs two lakh crore made by public sector across India and stayed behind Karnataka (38 per cent share) and Maharashtra (14.5 per cent share) in this regard.

As per the study, real estate investments in Gujarat have grown at a compounded annual growth rate (CAGR) of about 28 per cent during almost a decade (between 2005-06 and 2014-15), however the state remained behind Kerala (59 per cent growth), Karnataka (40 per cent), UP (32 per cent) and Rajasthan (29 per cent).