Which cities in India have the maximum stalled projects?

With reports of various housing projects being delayed or stalled, we look at how widespread the problem is and what home buyers can do, to safeguard themselves before investing

The real estate market, at present, is abuzz with news about stalled housing projects, giving an impression that all projects are now at risk of failure or becoming distressed. However, the real picture may not be as bad as it has been portrayed. According to a JLL India report, titled ‘Macro Trends in Residential May Be Misleading’, “Against the common myth that the entire residential real estate segment is troubled, it is the upper-middle income and premium property projects that are majorly delayed.” The question, hence, arises: Is the problem of stalled real estate projects exaggerated and overblown, contrary to the real picture?


Stalled real estate projects: A look at the situation on ground

Projects get stalled due to three major reasons – approvals not obtained, funding not obtained, or sales not up to the projected mark. It is a common perception that the entire residential sector is reeling under the pressure of delayed projects. However, data released by JLL shows that the total number of residential units classified as delayed/stalled, in the top seven cites, stands at 4.54 lakhs. Almost 84% of these units were present in two major metro cities: Delhi NCR (62%) and Mumbai (22%). These two cities had always been on the radar of investors, due to the promising returns and the scope for expansion that they offered. To arrive at the data, JLL Research considered a period of five years from the launch of the project, to estimate the delayed/stalled residential projects – i.e. residential projects launched on or before 2014 and still under-construction, have been referred to as delayed/stalled projects and the total number of flats/apartments in these projects are categorised as delayed/stalled residential units.


City-wise analysis of stalled housing projects 

CityNo of delayed/stalled residential unitsShare of overall delayed/stalled residential units
Delhi NCR2,81,00061.8%

Source: Real Estate Intelligence Services, JLL


“There is a general panic in the market, due to the failure of IL&FS, DHFL, etc. and this has resulted in several projects being reported as stalled by the media, over funding concerns. This has led to several brokers avoiding such projects altogether and the media reporting a larger number than actually observed. The problem is also exaggerated by brokers, who are not receiving commissions from even good builders, due to liquidity constraints,” explains Amit Goenka, MD & CEO at Nisus Finance.


What should home buyers do in this situation?

Buyers should check the RERA website for sales data, approval status and construction status, before buying a property. They should also check if the majority of the sales and/or developer funding is through a bank or NBFC. With the NBFC sector facing a liquidity crisis, this will help the buyer to ascertain the flow of funds to the project. Looking at the builder’s record can be helpful to some extent but one should not rely entirely on it. The financial position of a developer can deteriorate quickly, if the liquidity supply is squeezed. The role of a property consultant becomes vital in this situation, as they can guide a home buyer to identify the right seller and help them to avoid getting involved in a risky project.

According to Samantak Das, chief economist and head of research and REIS, JLL India and Shradha Agarwal, research analyst, JLL India, “Firstly, project delays in the residential segment, are not a pan-India phenomenon and are only limited to the major metropolitan cities of Delhi NCR and Mumbai, in terms of quantum, as well as value of projects. Secondly, the slowdown in the completion of projects is not across the entire spectrum of housing categories but is significantly visible in the upper-mid and premium categories. What is needed, is perhaps a push from the government and funding agencies, along with a strict code of conduct among developers, to improve the situation.”

In this context, the government has also recently announced the creation of an Alternative Investment Fund to the tune of Rs 25,000 crores, to provide funding support to distressed projects. This could revive stalled project and boost the sentiments of home buyers.


Was this article useful?
  • 😃 (7)
  • 😐 (1)
  • 😔 (0)