An Update On Delayed Projects In Delhi NCR

With the advent of the commercial and IT boom in Delhi, the suburbs also saw an unprecedented growth in all sectors of real estate construction. Delhi was already facing a land crunch, and Noida, Gurgaon, Faridabad and Ghaziabad consequently emerged as logical and ready options for real estate growth. This growth reflected in the residential sector, as well. Big real estate players like DLF and Unitech already had a strong foothold in NCR�s residential real estate sector. New developers also came into picture and launched projects every fortnight.

However, lack of foresight and a reckless �me-too� attitude by developers led to a large percentage of these projects being delayed for occupancy. Many of them, launched in 2005-06 with assurances of possession by 2008-2009, are yet to be completed. Today, as many as 63 large residential projects in NCR (accounting for almost 40000 units) are delayed by over four years. Out of these, around 10 projects with 9000 units have been delayed by over six years. This includes projects wherein possession of a small percentage of units has been handed over, while most of the whole project remains incomplete.

A look at the figures for these uncompleted projects reveals that a larger number of them are in Gurgaon and Faridabad, while Noida and Ghaziabad present a better picture. The developers involved represent a mixed bag of large, established players and new entrants into the NCR residential property fray. Almost all of these developers claim that they will deliver possession in 2012; nonetheless, construction has been ongoing for between 4 and 6 years if we consider 31 December 2011 as a reference date.

A deep dive into why these delays exist in the first place throws up the following reasons:

• Lack of initial capital to start the project on time
• Inefficient project management
• The socio-political situation in the adjoining areas/state
• Delay in procurement of material
• Cash-flow problems manifesting in the middle of project construction
• Issues of land acquisition
• Unplanned and hasty launches

Quick Reference:

• Number of delayed projects: 63
• Total units in such phases: 41088 (with some units handed over to buyers while the overall project continues to languish)

 

Santhosh Kumar, CEO � Operations, Jones Lang LaSalle India