New Delhi/Bangalore: The multiple towers of DLF Ltd’s Magnolias housing project in Gurgaon seem complete from the outside but it will take another year or so before the 589 premium apartments can be handed over to buyers, adding up to a three-year delay.
The country’s largest developer by market value launched the project in 2005. The project was to be finished by 2008; the new deadline is mid-2011.
As with several other ventures during the realty boom, the project was kicked off with an overseas partner, UK-based construction firm Laing O’Rourke (LOR), through a joint venture. But LOR exited its India business last year and DLF is now the sole developer.
“Due to this adjustment, the project got delayed. Construction is on now,” said Rajeev Talwar, executive director, DLF.
Project delays continue to dog home buyers even as builders bet big on the residential segment to steer them to recovery after the bust of 2008. Mint research shows at least 25 large residential projects in the Delhi-National Capital Region (NCR), Bangalore, Pune and Mumbai are about 18 months behind schedule, keeping buyers waiting while the firms themselves get on with new projects.
“It is doubtful if developers are serious about completing those projects that are lagging behind as priority, because the focus is on raking in money by launching projects at a premature level,” said Amit Goenka, national director, capital transactions, Knight Frank India, a property advisory. “Nearly all large projects are 12-18 months behind schedule.”
The project delays will only worsen the substantial inventory pile-up, which amounts to about 140 million sq. ft in the residential segment alone in Delhi-NCR, according to data by Mumbai-based Liases Foras, which tracks the realty sector.
Mumbai, which has seen the maximum property sales since November, has 80 million sq. ft of space unsold, including property that’s ready or under construction.
The inability of the developers to complete projects has been compounded by buyers falling behind on payments and curbs on bank financing.
Brigade Enterprises Ltd’s Brigade Gateway in north Bangalore is three years behind schedule, although some homes have been handed over to buyers. It will take two years for all 1,100 apartments to be given to their buyers, said a senior company official on condition of anonymity.
“While I have got keys of my apartment recently after a long wait, interior fit-outs of other units are yet to finish,” said Padmanabha, a home buyer in Brigade Gateway.
Smaller firms such as Omaxe Ltd, Parsvnath Developers Ltd, QVC Realty and Lodha Developers Ltd have also delayed many of their luxury projects.
Omaxe launched The Forest in Faridabad in 2008 and started some preliminary work at the time but construction commenced only this month.
“Due to some confusion related to construction activity in the Aravali range among government agencies, we stalled construction as a precautionary measure. We have resumed construction... which is going on in full swing now,” said an Omaxe spokesperson. The tentative completion date is mid-2012.
Parsvnath, which has several projects under construction, has delayed Exotica in Ghaziabad and PrideAsia in Chandigarh. While bookings in the second are on hold, Exotica is likely to be complete by the end of 2012.
A spokesman for Parsvnath said five towers at Exotica have been delivered and the remaining 13 towers, part of an extension, will be completed in two years. He declined to comment on PrideAsia as the project is the subject of litigation in a Chandigarh court.
Meanwhile, Mumbai’s Lodha, despite the delay of a year and a half at its high-end Bellissimo project, launched its much-hyped World One project in June.
A senior Lodha official, who can’t be named, said there was no shift in focus towards new projects. “Construction is on at Bellissimo and it is an important project for us and we have seen good sales,” he said.
Delays have put pressure on pricing and sales, analysts said.
When DLF launches its Mumbai textile mill project soon, five years after buying the land for Rs702 crore, the rates are going to be lower than what prevails in the area. Two analysts, who didn’t want to be named, said the developer is pre-selling stock at Rs15,000-18,000 per sq. ft.
DLF’s Talwar said the company is not in a hurry to launch the project and will see how the market pans out, considering there is huge supply of high-end residential space coming into Lower Parel alone.
In the Delhi-NCR region, several new sectors have been opened up for development in Gurgaon under the 2021 masterplan, where property rates are 30-40% lower than those in existing sectors.
“But lack of infrastructure has forced developers to either stop the construction or go slow with the progress,” said Sanjay Sharma, consultant and managing director of consultant firm Qubrex.com.