New Delhi/Bangalore: An investor who had put in Rs3 lakh in a realty project of New Delhi-based Triveni Infrastructure Development Co. Ltd is in a fix.
After launching the project in 2006 and promising to complete it in 24 months, the company has not allotted the apartment to the investor who asked not to be named as he fears the company would not give back his money.
The investor, 30, who lives in Rampur, Uttar Pradesh, paid Triveni the money as booking amount for an apartment in Triveni Galaxy, a high-rise complex coming up in Sector 78, Faridabad, a suburb of New Delhi.
Crunch time: Parsvnath Green Ville in Gurgaon. While low-rise apartments under the project have been handed over to buyers, possession of the high-rises have been delayed, say property brokers, as the financial crunch has forced Parsvnath and other developers to slow construction.
“I paid the booking amount when the pre-launch of the project took place in 2005,” he said. “But since then, the allotment of the apartment hasn’t been done, and they insist that I pay up the remaining instalments for it.”
A spokesperson for Triveni said: “Work is in full swing in the sector 78 project. Around 40-45% of the total work has been completed and we are trying our best to give the possession before the start of the Commonwealth Games (to be held in Delhi) in 2010.”
After a three-year boom, developers have slowed construction on projects as they are facing a financial crunch. High raw material costs, rising interest rates and spiralling inflation have pushed up construction costs, making it difficult for developers to complete projects on time.
There are many people who have been left in the lurch by developers who have delayed completing projects they launched during the real estate boom of 2005-06.
There are examples galore especially in New Delhi’s suburb of Gurgaon. Work on the high-rise apartments in Parsvnath Green Ville, a project by Parsvnath Developers Ltd on Gurgaon-Sohna Road, has been delayed by six-eight months, property brokers said. While low-rise apartments under the project have been handed over to buyers, possession of high-rise flats has been delayed by six months, said Rajiv Sinha of Veena Estate, a real estate agency.
Parsvnath’s spokesperson, Neetal Narang, however, denied any delay. “The project is on track,” she said.
Apartments in The Close, a Gurgaon housing project launched by Unitech Ltd, India’s second largest developer, in October 2004 have still not been handed over to buyers. “There are 17 towers in the north wing, of which 10 are close to possession and six towers are over a year behind completion date,” said Sanjay Sharma of real estate agency Gurgaonscoop.com.
Unitech declined to comment on the delay.
The story repeats itself in other cities. An information technology (IT) professional booked a Rs24 lakh two-bedroom flat at Electronic City in Bangalore in early 2007 when the property market was up and about. The project is now delayed by a year. Many of the buyers shot emails to the builder, Ittina Group, seeking reasons for the delay, but there has been no response.
“We know the builder didn’t have the funds to continue with the construction and, therefore, the delay. Now we are promised a December 2008 possession, but we aren’t convinced,” the IT professional, who is 39, said on condition of anonymity.
A senior official at Ittina said buyers would shortly be given possession, but didn’t specify when. The official didn’t wish to be quoted because he is not authorised to speak with the media. Interestingly, the company’s website says possession has already been given for the project.
Property brokers in Bangalore said the Shantiniketan project in Whitefield by the Prestige Group is delayed by two years and will now be completed by mid-2009. “A number of projects in Whitefield are stuck because the area is suffering from oversupply, and builders are cautious to continue construction even after launching them,” said Suresh V., a realty consultant.
A senior Prestige official, who requested anonymity as he is not authorized to speak with the media, had told Mint earlier that most of its projects were delayed due to rising construction costs.
Liquidity problems have also caused realtors to build in phases to bail themselves out from a slow market. Builders are dividing projects into phases, selling one phase and pumping the money from sales into the next.
“It is a wise move because it enables cash flow and allows construction to go on,” said Shailesh Kanani, an analyst with Angel Broking Ltd. “But builders are sitting on huge inventories and are unable to continue building without offloading stock, which is why the delays and projects stopping mid-way.”
Project delays have also propelled many developers to offer a safety net in the form of a penalty clause in the sale agreement. Tata Housing Development Co. Ltd, for example, has introduced this clause for the first time in its 32-storeyed Aquilla Heights project in north Bangalore. “The company pays the customer a penalty amount on a monthly basis if the project is delayed. This also puts pressure on the developer to deliver on time or else they need to pay up,” said a company spokesperson.