Project delays are one of the most alarming issues, historically dogging the Indian real estate sector. The dearth of effective planning and execution of construction activities, escalating construction costs, approval delays, diversion of allocated funds to other projects and tepid sales, are some of the predominant factors resulting in project delays. The home buyer is, of course, at the losing end.
During 2017, out of the total 5.8 lakh residential units slated to be completed across the top seven cities in India, only 1.5 lakh units were actually delivered until December 2017. This indicates that around 4.3 lakh units missed their stipulated completion deadlines. The National Capital Region (NCR), one of the country’s largest residential markets, was seriously wounded by sudden policy changes, structural reforms and the dubious practices of unscrupulous developers. As a result, it topped the list of cities with maximum project delays. Around 1.5 lakh units in NCR missed the 2017 deadline. The story in the Mumbai Metropolitan Region (MMR) was no different, with nearly 1.1 lakh units missing the said deadline.
NCR: Where project delays are the order of the day
In the NCR, out of the total 1.9 lakh units expected to be delivered in 2017, only 42,500 units were given for possession, as promised. Approximately 49 per cent (nearly 73,000 units) of the undelivered residential units were in Greater Noida, followed by 17 per cent (nearly 25,300 units) in Ghaziabad, 13 per cent (nearly 19,400 units) in Gurugram and 11 per cent (nearly 16,000 units) in Noida.
- Greater Noida: A deeper analysis of the construction activity in Greater Noida, reveals some glaring issues. Developers in Greater Noida were expected to deliver around 84,200 units in 2017, of which only 13 per cent were delivered and an additional 39,000 units (46 per cent) are committed for completion by 2018 year-end. Due to the National Green Tribunal (NGT) directive, projects in Greater Noida have been stalled for years, due to land litigations between farmers and the developers.
- Ghaziabad: Of the 29,300 units which were to be delivered in 2017, nearly 86 per cent failed to meet their deadline. Only 14 per cent have been handed over to buyers and around 8,100 units (32 per cent) are envisaged to be completed by year-end 2018. While a few projects have been sealed, for recovering the Ghaziabad Development Authority’s (GDA’s) development charges, others face difficulties in obtaining completion certificates.
- Gurugram: The Millennium City was also not able to deliver around 19,400 units in 2017, with the possession timeline being shifted to future dates. Out of 27,300 units committed for delivery in 2017, only 29 per cent were handed over to buyers and around 14,400 units (53 per cent) are being pushed for completion by year-end 2018. The good news is that most of the delayed units are likely to be completed in 2018 and the delivery of only limited units, is being pushed to the subsequent years.
- Noida: Barring of construction activity within a 10-km radius from the Okhla Bird Sanctuary between 2013 and 2015, stalled a large number of projects in Noida. Out of the 23,900 units committed for delivery in 2017, 67 per cent were unable to meet the deadline. Around 7,900 units (49 per cent) of the delayed units are projected to be completed by December 2018.
In addition, a severe cash crunch, due to the siphoning of funds by developers for other projects, tweaked project details to bypass environmental/regulatory clearances, changing norms, water/sand crisis and red-tapism, became some of the common causes for the long delay of projects in the NCR. Consumer sentiment was severely shaken by these delays and finally brought the sector to a standstill. Developers’ profits took a massive hit and their negative cash flows increased the delays even more.
Can NCR’s developers beat the odds in 2018?
The above analysis talks only about the delayed projects that are anticipated to be delivered by the end of 2018. Besides the delayed 79,400 units, whose revised possession timelines are now December 2018, there are actually planned deliveries of around 86,600 units for this year. Altogether, NCR developers are expected to deliver around 1.66 lakh units (3.9 times the units delivered in 2017) by this year-end.
Will developers in NCR be able to deliver such a large number? It is certainly something that bears watching closely. With RERA expected to streamline residential real estate, home buyers are hopeful that projects that have been stalled or slowed down over the years, will pick up momentum and finally be delivered.
The government authorities are certainly scrutinising the issue, by auditing long-delayed projects to chalk out initiatives and ensure their completion. All in all, with a massive number of residential units due for completion, 2018 is likely to be a tough year for the NCR property market.
(The writer is head – research, ANAROCK Property Consultants)