An analysis conducted on August 15 by the data analytic firm PropEquity revealed that financial mismanagement by real estate developers and a lack of execution capabilities have stalled nearly 2000 under construction housing projects spanning 44 cities and totalling over 5 lakh units.
Greater Noida had the highest percentage of stalled units among tier I cities, with 17% (74,645 units in 167 projects). Thane and Gurugram came in second and third, respectively, with 13% (57,520 units in 186 projects) and 12% (52,509 units in 158 projects). With 37,883 units, Mumbai has the most stalled projects with 234; Bengaluru has 225 projects with 39,908 units, and Thane has 186 projects.
There are 82 projects in Kolkata with 24,174 units, 92 projects in Chennai with 21,867 units, and 25 projects in Hyderabad with 6,169 units. There are 24,129 units in 172 stalled projects in Pune. The NSE-listed company reported that the number of stalled units had increased to 5.08 lakh, up approximately 9 percent from 4.65 lakh units in 2018. The data indicate that 1,636 projects in 14 tier I cities totalling 4,31,946 units and 345 projects in 28 tier II cities totalling 76,256 units have been put on hold.
Talking to this analysis, Samir Jasuja, Founder and CEO at PropEquity states, “The problem of stalled projects and the subsequent rise is due to the lack of execution capabilities of developers, cash flow mismanagement and diversion of funds to buy new land banks or retire other loans. The need of the hour is an independent third-party audit service for homebuyers to empower them to make an informed decision about the developers’ capabilities to complete the project on time.”
Further he added, “Real estate disputes in various courts have been rising. To add to this, the backlog of stalled projects and the addition of new ones have put the onus on homebuyers to do their due diligence through professional experts before buying a house”.
Similarly, Vijay Harsh Jha, Founder and CEO, VS Realtors (I) Pvt Ltd, a Gurugram-based property brokerage firm says, “The mounting number of stalled projects is not just a matter of concern but also a challenge that may take years to resolve. There is an urgent need to streamline the approval process, which will bring cheers to the investors and at the same time provide a big fillip to the real estate sector”.
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