Stuck Housing Projects of $66 Billion Weighing Down India Realty
India’s property market won’t recover meaningfully unless developers find solutions to 4.64 trillion rupees ($66.3 billion) worth of housing projects that have been stranded for years.
The Indian residential property market has been battling a slowdown this decade and despite several government reforms including a new consumer protection law and a nationwide sales tax, buyers have stayed away as questions remain over the future of stalled and delayed projects.
Residential projects worth 3.6 trillion rupees are stuck or delayed in the top two cities of Mumbai and Delhi and their wider suburbs since their launch in 2013. A total of 575,900 units are stranded at various stages of construction across India’s top seven cities. These projects include both sold and unsold inventory.
Developers, including Jaypee Infratech Ltd. and Unitech Ltd., have been taken before India’s courts by irate homeowners who shelled out payments for apartments that are yet to be completed. Housing prices continued to drop in the once red-hot South Asian market even as sales recovered marginally and launches improved in first half 2018.
Major factors that have contributed to delays in handing over properties across the country include a prolonged liquidity crunch, delayed environmental clearances, land disputes and delays in some states in appointing a regulator for the real estate industry. A shortage of skilled manpower to execute projects is another major hurdle in timely delivery of projects.
The government may have to step in to help where developers are unable to complete projects, said Anarock Chairman Anuj Puri. Buyers may have to spend more while lenders will have accept some losses on loans to avoid further delay or potential bankruptcy proceedings, he said.