Homeowners in India to complete unfinished flats
Few things illustrate the malaise in India’s property market as starkly as would-be homeowners having to dedicate untold hours to completing the flats they spent years saving up for. India’s property market is struggling to digest some $65 billion worth of projects in various stages of completion — or, in many cases, non-completion.
It’s an issue with the potential to sap confidence among house buyers, further complicating developers’ attempts to claw their way out from under a mountain of debt.
At a housing development in the state of Uttar Pradesh, purchasers will monitor construction after a local regulator stepped in. The buyers of the unfinished project had approached the state’s real estate regulator seeking a handover of the project to them after it had been stuck for three years and the builder had run out of money.
A series of economic shocks in the past three years, from the unexpected withdrawal of high-value rupee notes in 2016 to the sales tax introduced the following year, have dented property-market sentiment and caused funding for developers to dry up. Many lack the funds to keep projects aimed at millions of more affluent citizens going.
An analysis of about 11,000 home builders by research firm Liases Foras in February showed that developers on average have to repay twice as much in debt each year as the income they generate that can be used to service it. This comes as property prices in India’s biggest cities are flagging — home values in Mumbai sank 11 percent last year following a 5 percent decline in 2017. They ran up 32 percent in the four years through 2016.