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India’s real estate market significantly contributes to the lion’s share of the nation’s economic progression. In the residential real estate sector, companies majorly get customers from all segments as housing is a need rather than a discretion. Additionally, it’s also considered one of the safest and easiest ways of investing in a developing economy like India. Average Indian property seekers generally overspend while buying a house as it embraces several emotional aspects over financial matters. These homebuyers invest their lifelong savings in affording their dream homes. Leading real estate firms often entice them with myriad offers to finalise their purchasing decisions, which currently is considered a Ponzi scheme by the government regulatory bodies. However, despite their long-term investment, homebuyers become the victims of severely delayed and stalled housing projects across several Indian cities like NCR, Lucknow, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, etc.

Today, incomplete projects have emerged as the most complicated issue that shatters the dreams of millions of homebuyers. Such a prevailing unfortunate scenario compels countless homebuyers to go through a plight that haunts India’s real estate market.

The current scenario of India’s stalled residential projects

Stalled/delayed projects have been the bane of the Indian real estate industry over the past decade. As the hub of stalled real estate projects, a recent analysis states that India has around 500,000 housing projects worth INR 4.48 Lakh Crore stuck across seven micro markets. Other reports also highlight that the National Capital Region (NCR) leads in terms of the highest number (113,860) of stalled projects, followed by the Mumbai Metropolitan Region (MMR) with 41,720 delayed units. The worst affected are those who have already purchased living spaces in Noida and Greater Noida. According to Anarock, these two cities have more than 1.65 lakh stalled flats worth Rs 1.18 lakh. Besides, the Gurugram market has INR 44,455 Crore of 30,733 stalled/stuck units, and Ghaziabad has 22,128 such projects valued at Rs 9,254 Crore.

Factors adding to the delay of real estate projects

Various reasons contribute to the delay in housing units. First and foremost, the highly unregulated and traditional approach of the real estate market is the primary reason behind the slowdown of housing projects. Due to such a callous approach, most builders start building projects without due diligence. This situation ultimately pushes the projects to get mired in several litigations. Moreover, delays occur when the banks do not finance the purchased land, and consequently, developers tend to transfer amounts from one project to another. They continue this approach until their system lack funds and are aided by substantial money transactions. Furthermore, the problems of economic slowdown and trouble faced by NBFCs in securing a credible funding source make the situation worse for real estate developers.

As a result, builders cannot fulfil their tall claims of delivering residential properties on time to customers who have already paid a considerable amount to the developer. Many homebuyers have to wait for over ten years to get their home ready after investing their life savings and bank loans. Some residents even have to pay EMIs without being the house owners and with no hope of getting possession of their place soon. These worrisome woes make lakhs of homebuyers feel distressed and uncertain about their future and the real estate market.

Are there any potential solutions to this prevailing situation?

The Union Cabinet had set up an Alternative Investment Fund (AIF) of INR 25,000 Crore in 2019 to bail out almost 1,600 stalled real estate properties (comprising 4.58 lakh housing units) across the country and boost the economy. Besides, new-age real estate companies are also entering the market to revive homeowners’ lost hope and trust by bailing out stalled/stuck projects in various Indian regions (like NCR and Lucknow). They are putting strenuous efforts into reviving such failed projects and transforming them into best-in-class, affordable properties with world-class amenities. However, the body that assigns the projects belonging to the companies under Insolvency (like NCLT in India) must be sure about the company credentials who express interest in completing these stalled projects. In the case of non-verification of developer credentials by referring to the customer satisfaction index and general feedback in the market, the evaluation process should be exceptionally robust to weed out non-performing developers.

Final words

When existing developers fail to deliver projects on time, the new-age real estate developers can be the ideal solution to the age-old problem of stalled projects in India, backed by the Central Government’s support. Unlike other real estate companies, these firms are a group of specialists with enormous confidence and skill sets around their core competencies required for completing stuck projects and making them dream homes. An example of successful completion of such projects is in Lucknow, where new-aged real estate organisations have constituted a joint venture/acquisition of the defaulter company and delivered these projects with remarkable success. These organisations specifically cater to bail out stalled/delayed projects and enable their completion to fulfil residents’ dreams of staying in safe, reliable, and affordable living spaces. The passion for introducing new creations and compassion towards people helps and motivates these new-aged companies to keep going.