Residential projects in the top three real estate markets in India are facing massive execution delays. Around 45% of all projects that were launched pre 2008 in these three markets are still under construction, says a report by real estate research firm PropEquity.
Among the three, the national capital region (NCR) has the worst record, with just 23% of the projects completed by January 2012. Around 61% of the projects in the Mumbai metropolitan region (MMR) were completed in this period while Bangalore metropolitan region’s (BMR) performance was better at 66%.
“NCR has contributed to lot of the delays as the number of projects launched here were very large compared to the other two destinations. The developers did not have the execution bandwidth to complete so many large sized projects,” says Samir Jasuja, chief executive officer of PropEquity.
Execution timelines in the NCR were extended in due to delays in getting regulatory sanctions. Both large and small sized projects were affected in this market. Around 92% of affordable housing projects, 76% of mid-end projects and 72% of luxury projects are delayed in the NCR.
Of the delayed projects in the three markets, 40% are expected to be delivered by the end of December 2012, 48% by end December 2013 and around 12% by the end of 2014. In the MMR, 37% of affordable housing projects, 36% of mid-end projects and 48% of luxury projects are delayed. “In the MMR, it takes a lot of time to get all necessary clearances before a developer can start construction,” adds Jasuja.
In the Bangalore market, which ws the best among the three, 33% of affordable housing projects, 31% of mid-end projects and 45% of luxury projects are delayed. In these three markets, projects that had fewer than 300 units, categorized as small projects, saw a completion rate of 62% compared to just 23% for larger projects with over 300 units. Most of the larger projects are developed in phases and developers prefer to launch new phases on the basis on demand in the region.
Source – ET, PropEquity