Banks, real estate developers urge Noida, Greater Noida authorities to focus on completion of stuck projects

The problems faced by lenders who had pledged money to real estate projects in the region were discussed.

Banks and finance companies that have exposure to real estate projects in Noida and Greater Noida have expressed concern over the delay in completion of stuck projects in the Uttar Pradesh twin cities outside Delhi and warned of the region’s “declining feasibility” despite the real estate market looking up, sources said.

A meeting of the Noida and Greater Noida authorities and representatives of banks and real estate developers was held recently in Noida to thrash out the issues that plague the two markets and come up with an action plan to resolve the deadlock between real estate companies and the development authorities of Noida and Greater Noida over legacy land dues of nearly Rs 39,000 crore and to discuss an action plan for stuck housing units in the region.

Representatives of financial institutions who attended the meeting told Moneycontrol that the problems faced by lenders who had pledged money to real estate projects in the region were discussed.

Issues that were discussed at the meeting included the logjam over unpaid dues to the authorities, permission not be granted by the respective authority to mortgage properties and delays in issuing occupation certificates, among others.

“They (officials from the two authorities) wanted to understand from the lenders the problems they are facing and why they are not willing to invest further. They wanted to know if a solution can be found because while the real estate market is doing well, lenders are not willing to come forward to pledge money on account of the tussle between the authority concerned and the developers,” said one of the bankers.

The financial institutions have warned the authorities of the “declining feasibility” of investing in projects in the region if the logjam continues and advised the authorities to work towards ensuring that the projects are completed and become feasible. “A solution to stuck projects has to be found to ensure that fresh capital flows in. These solutions cannot be a one-size-fits-all but something which takes care of the issues on a case-by-case basis,” said another representative of a financial institution who attended the meeting.

Issues range from providing a single-window clearance to the authorities having allotted but not having given possession of land on which interest continues to be charged, they said.

Real estate developers who attended the meeting told Moneycontrol that the priority of the financial institutions was that their investment in the region should be safe.

They were of the view that despite the positive sentiment in the real estate market and the infrastructure provided by the authorities, there was no clarity among lenders on whether the projects that they are funding will get completed on time and whether they would be registered at all.

Builders have suggested that the two bodies that oversee the integrated townships should divide projects into two buckets, ones that are facing financial issues and those that are not. They have also stressed the need to focus on rationalisation of dues that builders owe to the authorities.

“Unless that happens, the logjam may not get resolved. We are not permitted to sell a stuck project to a third party to complete it or bring in a co-developer as these are not permitted under authority rules. The larger goal today should be to complete the stuck projects,” Manoj Gaur, chairman of the National Capital Region chapter of the Confederation of Real Estate Developers' Associations of India, told Moneycontrol. “We are hoping that there will be some policy or direction from the government on this front soon.”

Manoj Singh, the commissioner of the Uttar Pradesh Industrial and Infrastructure and Development Department, chaired the meeting to discuss the issue of stuck projects. "We have discussed (the issues) and in two weeks we will come up with a plan to resolve the logjam," he was quoted by PTI as saying.

According to official estimates, more than 100 housing projects in the twin cities of Noida and Greater Noida are stuck or have been delayed, affecting hundreds of thousands of would-be homebuyers.