About 1.47 million residential units across seven major cities in India are delayed by 14-30 months, creating a crisis for not only the homebuyers but also the developers which are facing cash crunch on one hand and litigations on the other.
Almost all of these projects were launched between 2008 and 2010, and the residential units were supposed to be delivered between 2013 and 2015. Ideally, a housing project should be delivered within 36 months, after which a grace period of six months is granted.
Data compiled by real estate consultancy PropEquity shows that about 7,391 residential projects, out of 9,591 projects launched between 2008 and 2010, have remained unfinished. As many as 2,567 of the delayed projects are in Mumbai metropolitan region (MMR), followed by Pune with 1,254 projects, Bengaluru with 1,205 projects and National Capital Region (NCR) with 784 projects.
A residential unit could be an apartment, an independent floor or a villa. The study covers Pune, Kolkata, Hyderabad, Chennai, Bengaluru, MMR, and NCR. It includes only those projects which were supposed to be ready between 2013 and 2015.
The data show the grim reality of the real estate sector which has failed to recover from the 2008 financial crisis. Many developers diverted funds raised from one project to another, leading to cash crunch and inventory pile up. No wonder, new launches have come down drastically in the residential realty space.
Of late, homebuyers’ protests have become a common thing thanks to increased consumer awareness and platforms like social media which have made it easier for people to connect and communicate with groups. The lack of regulator in the sector has added to the problems. The government has been talking about regulations for the realty sector since last six years but the Bill for setting up a regulator is yet to be cleared by the Parliament. People are hoping that the Bill will get through in the upcoming Budget session.
Buyers’ activism has revolved around delays, poor construction quality, irregularities in project implementation and non-delivery of promised amenities. Recently, Unitech’s top officials had to spent a night in the jail after being taken to courts for delay in delivery.
Due to this, developers have now started changing the completion clause in the buyer’s agreements from three years to five years, being more realistic about the timeline of a project, says a senior executive of real estate firm.
He adds the new completion schedule will take into the account the unforeseen circumstances including delay in government approvals and various litigation issues that come up after launching a project.