Homebuyers of under-construction properties in the top seven cities continue to suffer and the situation does not seem to improve anytime sooner. Some of them are waiting for the delivery of their dream homes that were launched either in 2013 or even before that.
The gravity of the situation can be understood better with the figures recently released by ANAROCK Property Consultants. As per their recent report, around 5.6 lakh housing units, worth Rs 4.5 lakh crore, in seven major cities are running behind the delivery timelines.
These 5.6 lakh units comprise of flats and houses that were launched before 2013 in seven cities: National Capital Region (NCR), Mumbai Metropolitan Region (MMR), Chennai, Kolkata, Bengaluru, Hyderabad, and Pune. NCR and MMR hold the lion’s share here as almost the duo accounts for 72 percent of the total delayed housing projects.
While in In MMR, as many as 1,92,100 apartments worth Rs 2,17,550 crore are delayed, NCR has 2,10,200 units worth Rs 1,31,460 crore running behind the schedule, Money Control reported. The Southern cities are better-off in this aspect as Bengaluru, Chennai and Hyderabad together account for a mere 10 percent of the overall delayed housing projects of a total worth of Rs 41,770 crore.
Clearly, the biggest worry of any home buyer in an under-construction property is the surety of the time delay. And going by the figures, it seems that almost 80 percent of under-construction properties in India get delayed from their promised timeline due to some or the other reason.
The primary reason for the delay is the lack of funds.
“It has become a ‘chicken and egg’ situation – buyers have understandably stopped releasing funds to builders, and builders claim they have no funds to complete construction,” the publication quoted Anarock founder and chairman Anuj Puri as saying.
Other factors like execution challenges, surplus supply due to over-ambitious launches by developers, environmental clearances, and regulatory hurdles also contribute to the stalling of the projects. Like in pre-RERA time, many developers launched greenfield projects without the requisite approvals in place. As a result, projects are stuck and buyers are at the receiving end.
It is high time that Indian buyers should beware of under-construction properties. At the same time, developers should also be aware that if they do not buckle up now and buyers stop purchasing under-construction properties, they would have a far more challenging time to get funds from external sources for project construction.