Delays have been the bane of India’s real estate sector over the past decade. It is fairly common for builders to postpone projects citing financial strain or labour challenges, which only result in hardships for homeowners who continue to pay back loans and live on rent while waiting for their dream homes.
As many as half a million homes worth Rs 4.48 lakh crore across seven key markets in India are yet to be completed, real estate consultancy Anarock said in a report.
The National Capital Region (NCR) and the Mumbai Metropolitan Region together account for 77 percent of such projects, followed by Pune at 9 percent. The southern metros of Bengaluru, Chennai and Hyderabad together have a 9 percent share, while Kolkata accounts for 5 percent of the delayed homes.
Across Indian cities, buyers are waiting – for over a decade in some cases – for their dream homes after investing their life savings and taking bank loans. It’s been a treacherous path for them from the time they booked an apartment, a path that runs through government offices, tribunals, and courts.
Developers of delayed projects, on the other hand, claim they face a cash crunch, which led them to halt projects. However, experts say the cash crunch is primarily due to financial indiscipline and diversion of funds in the era before the enactment of the Real Estate (Regulation and Development) Act, 2016.
Prior to RERA, developers used the funds collected from homebuyers to acquire additional land and launch new projects, which they eventually abandoned, leaving buyers in the lurch. Most projects that are incomplete belong to the pre-RERA regime, real estate experts said.
Moneycontrol chronicles the plight of homebuyers in 12 such stalled projects across Mumbai, Bengaluru and the NCR (New Delhi and surrounding areas such as Gurgaon, Noida and Faridabad).
Runwal Sanctuary, Mumbai
As many as 100 buyers in the Runwal Sanctuary project in Mulund have been awaiting possession of their apartments for almost 15 years. Many of the buyers booked flats between 2005 and 2009 when they were in their late 50s or 60s. The project, being developed by the Runwal Group, ran into delays after a legal dispute over the status of the plot on which it was being constructed, which authorities claimed was private forest land.
Raj Torres, Mumbai
Another 100 homebuyers who invested in the Raj Torres project on Ghodbunder Road are yet to move into their homes that were launched in 2014 by Rajesh Estates and Nirman Pvt under the banner Rajesh LifeSpaces. The project came to a standstill after the developer ostensibly ran into financial difficulties. Some buyers have approached the conciliation forum of the Maharashtra RERA (Real Estate Regulatory Authority) but the developer has not responded yet.
Pavilion - Ozone Urbania, Bengaluru
Almost 100 homebuyers, some of whom paid close to Rs 1 crore each for an apartment in the Pavilion block of the Ozone Urbania project, have been left in the lurch. Launched in 2014, the block in this township was scheduled to be completed by 2016. Buyers have filed cases with the Karnataka RERA, the national consumer court as well as the high court. While cases continue piling up, buyers feel financially strangled and mentally stressed.
Mantri Energia, Bengaluru
Buyers who invested in the Mantri Energia project are yet to move into their homes. Construction started in 2014 and was scheduled to be completed in 2018. Allottees filed cases in the state RERA against the builder, which appears to be struggling with a debilitating cash crunch. Homebuyers claim the builder blamed the delay on demonetisation and the Covid-19 pandemic. However, they allege the builder diverted funds to multiple projects. On June 26, the Directorate of Enforcement arrested Sushil P Mantri, director of Bengaluru-based Mantri Developers, in a money-laundering/fund diversion investigation.
NCR: Notorious Construction Record?
The NCR is becoming the location of more stalled housing projects than any other part of India. Vast tracts of land in parts of Noida, Greater Noida and Gurgaon on the outskirts of New Delhi resemble ghost towns, bereft of inhabitants and pockmarked by half-finished edifices.
Absence of regulatory oversight, a puzzling medley of land rules, alleged diversion of money paid by homebuyers, supply that outpaced demand, a credit crunch and collapsing returns, pending insolvency resolution plans, and the inability of builders to pay dues to city and development authorities have all contributed to this state of affairs.
The problem is not limited to the Unitech Group, Amrapali Group and Jaypee Group, which have received attention because of high-profile court battles. It’s also about properties bought by investors or punters and legacy issues that developers face.
The Comptroller and Auditor General (CAG), in a performance assessment report on the Noida Authority presented in the Uttar Pradesh assembly last year, observed a raft of ‘irregularities’ in land allotment and approval of development plans because of a nexus between builders and officials. This led to a loss of Rs 55,000 crore to the state exchequer between 2005 and 2014, the CAG said.
Anarock said in its report that there are 240,610 stuck/delayed units worth over Rs 1.81 lakh crore in the NCR until May 2022 end.
Moneycontrol profiled a few delayed projects in Noida, Ghaziabad, Faridabad and Gurgaon and this is what it found.
Tashee Homes/Tashee Capital Gateway, GurgaonThis project in Gurgaon’s Sector 110A and 111 was launched in 2010. As many as 475 buyers – civilians and military personnel alike – bought homes here. KNS Infracon, the developer, abruptly stopped construction in 2016, without specifying a reason. Some buyers have been fighting a battle in the consumer court for the past five years and the final hearing is slated for this month. Others moved the Haryana RERA in 2020 seeking compensation for the delay. The builder filed an insolvency case that was rejected.
Earth Infrastructure started this project in 2010, promising possession within three years. The company collected crores of rupees from prospective buyers and yet not one flat has been handed over. For about 3,000 buyers, the wait is long and agonising. The Noida Police, which investigated the case on buyers’ complaints, said company officials diverted funds meant for housing projects to several shell companies. Around 1,800 buyers first approached the Supreme Court in 2016 but were told to move an appropriate authority. They took their case to the consumer court in 2017.
The same year, an investor, Deepak Khanna, moved the National Company Law Tribunal (NCLT). Although the NCLT approved the resolution plan of the Roma Unicon Designex consortium, the Greater Noida Industrial Development Authority challenged the order, alleging non-payment of land-lease dues.
Earth Infra had also launched Earth Copia/Ananta in Sector 112 of Gurgaon, Earth Sapphire Court in Knowledge Park 5 of Greater Noida, and Earth Techone located on the Yamuna Expressway in Greater Noida. These projects were launched between 2010 and 2012 but not a single unit has been delivered. Construction stopped in 2016 and the buyers moved NCLT in 2018. In June 2021, the NCLT selected Alpha Corp Development as the resolution applicant for the three projects, but the Noida Authority contested the decision.
The issue is not limited to payment of dues to the authorities. The Noida Authority challenged the operational creditor status that it was given in the case and its review petition is pending in the Supreme Court.
Ridge Residency, Noida
Today Homes’ Ridge Residency in Sector 135 was conceptualised around 2010. The builder had taken land on lease from the Noida Authority and stopped construction in early 2019 for unknown reasons. While it had delivered 646 units across nine towers in 2015, about 850 buyers were awaiting delivery when the builder was declared insolvent in 2019. Here, too, the Noida Authority has claimed pending land dues and is awaiting the Supreme Court’s order on its review petition contesting the NCLT’s decision to grant it operation creditor status.
Red Apple projects, Ghaziabad
The story of the Red Apple projects developed by Idea Builders and Manju J Homes is a tale of deceit and an alleged builder-bank nexus that duped more than 2,000 homebuyers. Most of these projects were launched in 2012-2013 in Ghaziabad by Rajkumar Jain and his associates under a ‘no EMI till possession’ offer. Till date though, none of the three projects —Red Apple Residency, Red Apple Homez and Bahubali Enclave — have been completed and not a single flat has been delivered. The case is in the NCLT but due to the pandemic and other issues, it has only been getting new dates. Even an interim resolution professional has not been appointed, say buyers.
Ajnara Ambrosia, Noida
Located in Sector 118, the project was formally launched in 2014. Eight years later, more than 1,600 buyers of homes spread across 10 towers are still waiting. Some buyers knocked on the doors of the Uttar Pradesh Real Estate Regulatory Authority in 2018. About 100 buyers decided to approach the NCLT in 2021.
SARE Homes, Gurgaon
The project by SARE Homes in Gurgaon is unique. South Asian Real Estate (India) was a real estate firm floated by an international fund that acted as a developer and was run by professional managers. It was promoted by London-based global asset and real estate management firm Duet Group.
Till date, 1400 buyers have knocked on the doors of the NCLT, the consumer court, and the Haryana RERA. The resolution plan is yet to be cleared by NCLT. A consortium of KGK Realty and Dhoot Infrastructure Projects had taken over Sare Gurugram Pvt, a unit of SARE Homes, under the Insolvency and Bankruptcy Code in December 2021 and is completing construction of a township that has 1400 buyers awaiting delivery of their units. The firm has applied for renewal of licence that expired in 2016. In Gurgaon, real estate developers have to get their project license renewed after every two years.
Lotus Panache, NoidaPerhaps the only project to offer light at the end of the tunnel is Lotus Panache in Sector 110 of Noida. The project was launched in May 2010 and construction of 31 towers was to be completed by August 2013. But the developer failed to do so and homebuyers alleged the promoters had diverted their money. While a resolution plan before the NCLT is yet to be approved, the resolution professional has ensured that the company runs as a going concern and at least 800 units have been completed.