Housing projects worth R 3.3L crore are pending execution, says report

Foresees era of consolidation led by larger players

Real estate in the country may be witnessing green shoots of recovery in select micro markets however over 4.65 lakh units of housing projects are significantly behind delivery deadlines with daunting construction delays, according to a latest report by online real estate data and analytics platform PropEquity. These projects are on hold for a variety of reasons including financial constraints, execution challenges, surplus supply due to overambitious launches by developers, environmental clearances and slowing sales.

According to the PropEquity report, the total value of projects facing construction delays is Rs 3.3 lakh crore or over $47 billion. Interestingly, in the National Capital Region, over 70 per cent of the projects pending execution are fully sold out but not delivered post the completion deadline. Hence the developers here are under the maximum distress as they face the buyer pressure to complete the sold units.

The report said nearly 1.80 lakh units valued at Rs 1.22 lakh crore are facing an uncertain future in the NCR region (Gurugram, Noida, Greater Noida, Ghaziabad and Faridabad).

In the Mumbai Metropolitan Region (MMR), 1.05 lakh units worth Rs 1.12 lakh crore are pending completion. Since over 40 per cent of these projects are absorbed, there are fewer customers when compared to NCR, who are facing a scenario of non-delivery by developers. (MMR includes, Mumbai, Navi Mumbai and Thane).

Samir Jasuja, MD, PropEquity: “Although the markets are facing significant execution delays we do expect the reputed developers to perform well. We also anticipate that the resolution to this difficult scenario will occur in the form of consolidation”.

Mr. Samir Jasuja, Founder and MD of PropEquity, said, “Although the markets are facing significant execution delays we do expect the reputed developers to perform well. We also anticipate that the resolution to this difficult scenario will occur in the form of consolidation that will be led by the larger and more capable developers who have the construction and execution capability to meet their promises”.

Kolkata and Hyderabad have been relatively insulated as compared to other regions as only 15,552 and 13,710 units respectively are pending execution with a valuation of Rs 6,175 crore and Rs 7,778 crore respectively. Both these cities were able to sell less than half of these projects.

As Bengaluru is an end-user driven market, only 40 per cent of the projects pending execution were sold as these projects found few takers only. The total value of these projects stood at Rs 26,454 crore for 38,242 units.

• The report said nearly 1.80 lakh units valued at Rs 1.22 lakh crore are facing an uncertain future in the NCR region (Gurugram, Noida, Greater Noida, Ghaziabad and Faridabad).
• In MMR, 1.05 lakh units worth Rs 1.12 lakh crore are pending completion. Since over 40 per cent of these projects are absorbed, there are fewer customers who are facing a scenario of non-delivery by developers.
• Kolkata and Hyderabad have been relatively insulated as compared to other regions as only 15,552 and 13,710 units respectively are pending execution with a valuation of Rs 6,175 crore and Rs 7,778 crore respectively.
• As Bengaluru is an end-user driven market, only 40 per cent of the projects pending execution were sold. The total value of these projects stood at Rs 26,454 crore for 38,242 units.
•  Pune, which has 22,517 units on hold, witnessed only 35 per cent absorption of these units. Comparatively, Chennai with 20,847 units facing execution challenges saw 47 per cent of these projects being sold with a total value of Rs 9,511crore.
• The report concludes that as the real estate market gets accustomed to reforms like GST and RERA, absorption for ready-to-move and nearing completion projects will witness a preference and thus increase.

Pune, which has 22,517 units on hold, witnessed only 35 per cent absorption of these units. Comparatively, Chennai with 20,847 units facing execution challenges saw 47 per cent of these projects being sold with a total value of Rs 9,511crore.

“Our latest research further reiterates that projects that are completed or nearing completion are attracting maximum buyers as these projects seem to be most risk averse in the eyes of the buyer. However, we also believe that projects by renowned developers, with strong fundamentals would continue to do well irrespective of stage of construction,” added Jasuja.

The report concludes that as the real estate market gets accustomed to reforms like GST and RERA, absorption for ready-to-move and nearing completion projects will witness a preference and thus increase. Affordable and mid-income segment is expected to further grow due to favourable Government policies, it said.

The analytics firm foresees an era of consolidation that will be led by the larger and more capable developers who have the construction and execution capability to meet their commitments.