Over 12,300 residential projects across India are delayed as the real-estate sector continues to grapple with dwindling prices and cash crunch.
At stake are more than 2 million units, some of which may never see the light of the day, according to data from PropEquity, a real-estate research company.
Of these projects launched between January 2009 and December 2014, 1,018 are in the National Capital Region and over 3,800 are in the Mumbai Metropolitan Region.
On an average, construction projects stand delayed by 18 months across the country, with NCR at the top at 27 months.
“During the boom years of 2006-2010, new residential projects were launched in the NCR at break-neck speed,” says Sanjay Sharma, Managing Director of Gurugram-based real-estate consultancy QuBREX.
“ Many of these have not been completed even today, almost a decade later. The entry of inexperienced and unprofessional developers has upset the market situation,” he said.
Samir Jasuja, Founder and CEO of PropEquity, says the biggest reason for the delay has been the diversion of funds from one project to another. “Builders raised money, but instead of completing the existing projects, they invested it in buying new land parcels.”
Pankaj Kapoor, MD of real-estate consultancy Liases Foras, says with a slowdown in sales and inventory piling up, builders were cash-strapped. “Builders over-leveraged themselves during the heyday,” he says.
Jasuja points out that diversion of funds from one project to another led developers into a debt trap as they were not able to service the debt. An example is Noida-based Amrapali Builders, which sold over 45,000 homes without having the ability to execute such large-scale projects.
The National Company Law Tribunal has now admitted an insolvency plea from Bank of Baroda against Amrapali’s three firms — Ultra Homes Construction, Silicon City and Amrapali InfraCon.