Over 60% of home buyers may fail to get delivery of flats this year

Completion of more than half of these apartments is likely to spill over into 2017, said Samir Jasuja, managing director of PropEquity.

NEW DELHI: More than half of the homebuyers may not get delivery of the apartments they were promised this year, spelling continuation of the malady that has beset India’s real estate market for about a decade.

Across India’s top seven cities, only 180,716 apartments were completed by June, according to data from property research firm PropEquity, while 674,834 apartments were expected to be completed by the end of 2016.

Completion of more than half of these apartments is likely to spill over into 2017, said Samir Jasuja, managing director of PropEquity.

More than 60 per cent of these apartments were launched between 2010 and 2013, indicating a delay of one to three years already and the wait is only going to get longer for homebuyers. As per the schedule announced by builders, 621,297 apartments are to be completed and delivered in 2017. But this number will increase due to the spillover from this year.

“The situation is reflective of the liquidity crunch in the market and also a demand slowdown,” said Anshuman Magazine, chairman, India and South East Asia at property consultancy CBRE.

Of the 674,834 apartments that were expected to be completed in 2016, Thane was to see completion of maximum number of 104,788 homes, followed by Bengaluru at 102,115 and Pune at 88,627. Greater Noida is slated to see maximum completions in 2017 with 90,779 units, followed by Bengaluru at 85,716. In 2015, 380,808 flats were completed while the figures for the earlier years were 268,376 in 2014, 214,811 in 2013 and 202,741 in 2012.

Ashish Sarin, CEO of Gurgaon-based builder Alpha Corp Development said overestimation of demand, not safeguarding of buyers’ money, escalation in costs and eventually drying up of funds have resulted in this situation.

Jasuja said builders have been trying to revive stalled projects by working with buyers but it is likely to take some more time. “Builders are still unable to speed up construction because of cash flow issues,” he said.

This is a blessing in disguise, however, for those looking to sell their apartments. If all these apartments were to get completed together in 2016, prices may have fallen further, said Magazine.

A slowdown in home sales over the past two years has pushed builders, faced with a tight liquidity situation, to seek funding from nonbanking finance companies and other funds to complete their under-construction projects, which in many cases are delayed, and also to refinance their older loans. This uncertainty has also trickled down to the minds of potential homebuyers who increasingly prefer to buy completed apartments.

Magazine, however, said that home sales have picked up in recent quarters in the mid-segment across cities.

Source: http://realty.economictimes.indiatimes.com/news/residential/realty-woes-over-60-of-homes-to-miss-delivery-deadline-in-2016/54303698

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