Delay hits 40% residential projects in MMR

The report looks at all such projects launched between January 2007 and June 2009 and were supposed to be ready for possession by January 2012.

“The hi-end property market has been most hit due to three reasons. The first is the general delay in approvals in Mumbai where no project was sanctioned for almost a year-and-a-half. Secondly,many of these projects are 50 to 70 storey towers with certain promised amenities in South Mumbai,the execution for which takes time,” said Samir Jasuja,chief executive officer at PropEquity.

Jasuja added that the most important reason for the delay in this particular segment is that financing has been an issue due to overall slowdown.

Also,several developers have sold much more than they are capable of executing,he said. The survey also shows that a major chunk of incomplete projects is large ones with more than 300 residential units.

The survey takes into account a total of 1,920 projects in MMR,National Capital Region-Delhi (NCR) and Bangalore Metropolitan Region (BMR).

It states that several of the ongoing projects were those launched suring the pre 2008 crisis and “are now facing severe funding crunch,increased borrowing costs,falling global macro-economic trends and dwindling housing demand.”

However,of the three cities,NCR accounts for maximum delays as the number of projects launched in Gurgaon,Noida and Greater Noida is very large compared to MMR and Bangalore.

In NCR,only 23 per cent of the projects was completed by January 2012 against 61 per cent in MMR and 66 per cent in Bangalore.

“The other reason is that the realty market picked up post subprime crisis and several projects were announced,but developers did not have the execution bandwidth for it. In several cases,they used funds raised from projects to acquire land banks,” said Jasuja.

He added that going from here,buyers can expect an average delay of nine months for ongoing projects in these cities.