Over 5 lakh homes lying undelivered across the country

About a fifth of under-construction homes in India aggregating to over five lakh units, belonging to stalled projects, are lying undelivered over the last eight years to buyers who have purchased them, according to data analytics firm PropEquity.

The remaining homes were delivered but with a delay of three-four years.

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Close to 2,000 projects in 44 cities have been stalled across the country, the data showed.

Over the last six years, that is from 2018 onwards, the number of stalled units have risen 9 per cent to 5.08 lakh units.

“The problem of stalled projects and the subsequent rise is due to the lack of execution capabilities of developers, cash flow mismanagement and diversion of funds to buy new land banks or retire other loans,” said Samir Jasuja, Founder and CEO, PropEquity.

Stalled projects

While Mumbai, the biggest and most expensive real estate market in the country, has the most number of stalled projects, Greater Noida accounted for the highest number of units that had not been delivered to homebuyers.

“The need of the hour is an independent third-party audit services for home-buyers to empower them to make an informed decision about the developers’ capabilities to complete the project on time,” he said.

In 2019, the Central government had launched the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund in order to address the issue of stalled projects. So far, the fund has raised ₹15,530 crore and in the last five years only 32,000 units have been completed. The Economic Survey, tabled last month, stated that the government aimed to deliver 20,000 delayed homes annually.

Jasuja pointed out that courts across the country were clogged with real estate disputes, and cases were rising.

Across 14 tier-1 cities, 1,636 projects with over 4.3 lakh units were stalled and across 28 tier-2 cities, 345 projects with over 76,000 units were stalled. Greater Noida topped the list in tier-1 cities with 74,645 units and Bhiwandi topped the tier-2 list with 13,393 units.

Mumbai had maximum number of stalled projects at 234, followed by Bengaluru with 225 projects and Thane with 186 projects.

The advent of the Real Estate Regulation and Development Act, which is enforced State-wise, has made some impact in ensuring that developers construct their projects on time and adhere to timelines. However, while top developers follow the guidelines and timelines, smaller developers are often in violation mostly due to lack of finances and diversion of funds for other purposes.

“The mounting number of stalled projects is not just a matter of concern, but also a challenge that may take years to resolve,” said Vijay Harsh Jha, Founder and CEO, VS Realtors, a Gurugram-based property brokerage firm.

“There is an urgent need to streamline the approval process, which will bring cheer to the investors and at the same time provide a big fillip to the real estate sector.”