Seven major cities in the country are witnessing a whopping Rs 4.52 lakh crore worth of housing projects stuck in different stages of completion, despite the government claiming the success of Real Estate (Regulation and Development) Act (RERA).
According to the data available with the residential real estate advisory firm Anarock, as many as 5,61,100 housing units, that were launched before 2014 are delayed till date. The state of Maharashtra, with two cities of Mumbai and Pune, is the worst affected in this regard.
The state alone constitutes 49.7% of the projects delayed nationally, in volume terms and 59.9% in value terms. Mumbai has Rs 2,17,550 crore stuck in 1,92,100 projects, while Pune has Rs 53,060 crore stuck in 86,700 delayed housing projects.
On the other hand, the southern part of the country — which includes Bengaluru, Chennai, and Hyderabad — together account for a mere 10% of the overall incomplete housing units worth Rs 41,770 crore. IT capital of India, Bengaluru, has 40,450 housing units worth Rs 29,880 crore stuck in the construction since 2013.
In volume terms, the National Capital Region accounts for the highest number of delayed projects. The city is seeing 2,10,200 housing units stuck in construction, since 2013. Experts attribute the phenomenon on the credit crunch prevailing in the country post-IL&FS fiasco.
“Besides some developers’ lack of interest to complete their projects and preference for funds diversion, the tightening credit crunch has been one major factor contributing to this mounting problem. It has become a ‘chicken and egg’ situation – buyers have understandably stopped releasing funds to builders, and builders claim they have no funds to complete construction,” Anarock said in a research report.
Also, every delayed project results in cost overruns which compound the funding crunch even further. Lack of project clearances for whatever reason also contributes to the piling up of housing stock.
“In the pre-RERA era, many builders launched greenfield projects without the requisite approvals in place, resulting in their projects getting stuck,” it added.