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The Confederation of Real Estate Developers' Association of India (Credai) says it is thinking of suspending from its membership some companies in the National Capital Region (NCR) which have repeatedly gone back on promises to buyers.
"The realty sector has earned a bad name because of some developers. We need to enforce discipline among our members and ensure a code of conduct, clearly specifying commitments and penalty provisions," Credai president Getamber Anand, who is also chairman and managing director of ATS Infrastructure, told Business Standard.
"Only developers who are serious about their business will be part of Credai now.... We are trying to bring in transparency and bridging the communication divide between buyers and developers," he said.
Credai has 11,500 members across India, with 200 in the NCR. Anand declined to name the developers under watch.
Delivery delays, changes in structure or designs in a project and developers going back on promises have been common. These issues have given rise to consumer activism, too, in courts and outside. One such instance led finally to a Rs 630 crore penalty being imposed by the Competition Commission of India on DLF, the largest property developer in the country. The matter is pending at the Supreme Court, where the company had appealed.
In another instance, Supertech bore the brunt of buyers' wrath when the Allahabad High Court, on a petition by its residents' association, ordered demolition of two towers in one of its Noida projects. This is also before the Supreme Court.
Anand took charge as Credai president in March. "We have to clean the mess and bring back confidence in buyers' minds," he says. There is now an entry barrier before becoming a Credai member. One has to deliver 100,000 sq ft of area and get recommendations from two developers who are already members. Earlier, there was no such criteria for being an association member.
Also, a consumer grievances redressal forum under Credai has been trying to resolve complaints through mediation between buyers and developers. The panel comprises retired high court judges and others. Buyers/consumers are free to approach the formal courts if not satisfied. The forum had been around for some years but wasn't being actively used.
There have been delays of years in delivery of housing projects in the NCR and in some other parts of the country. Even prominent developers have fallen on delivery commitments due to liquidity issues and delayed approvals, say experts.
With declining sales, inventory levels are also at a record high.
Data from research firm Liases Foras shows 71 months of inventory in the NCR, followed by 46 months in the Mumbai Metropolitan Region and 36 months in Chennai for the January-March quarter.
Inventory is the number of months needed to clear the stock at the existing absorption rate. A healthy market maintains eight to 12 months of inventory.
Samir Jasuja, founder and chief executive officer, PropEquity, had said liquidity and oversupply were the culprits. "The liquidity crunch impacts projects in the middle of construction and the oversupply situation is deterring developers from launching new projects."
