BackBuyers face delays in getting apartments
Buyers face delays in getting apartments
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New Delhi: As developers across the country go slow on construction due to the shortage of labour, costlier building materials and liquidity drying up, home buyers are hurting, especially those who have purchased residences in the Noida-Greater Noida area.
Also hit are buyers of homes in one of the largest real estate developments in the area, Jaypee Wish Town in Sector 128 of Noida being developed by Jaypee Greens, the real estate arm of Jaiprakash Associates Ltd. (JAL), an infrastructure company that also runs hotels, cement plants, utilities and recently opened the Buddh International Race Circuit, which successfully hosted India’s first Formula One Grand Prix in October last year.
The Jaypee Wish Town Flat Owners Association, which groups about 600 of them, was formed to lobby with the company’s promoters and has been in talks with them since last year. It said the developer has not given any clarity on completion dates of projects, possession or compensation for delay.
“Some had invested their savings, paying a lump sum upfront, some had borrowed money to invest, some are still paying interest on borrowings and others moved into rented accommodation in anticipation of delivery—a variety of issues are faced by members whose liabilities continue to accrue with project completion being nowhere in sight," said D.V.S Trehan, president of the association.
Jaypee Greens is developing a total of around 25 projects comprising 30,000 units in the Noida-Greater Noida Region. Around 2,000 of these are in four mid-segment to upscale residential projects, Kalypso Court, Imperial Court, Pavilion Courts and Pavilion Heights, which have been delayed by one-two years already.
Launched in early 2007 and 2008, the first three were scheduled to be completed by 2011. Pavilion Heights was launched in 2009 and expected to be ready in 2012.
“Pavilion Heights is also running behind schedule by a year," said Ajit Kumar, director, Jaypee Greens. “The other projects are running behind schedule by 1.5-2 years."
Kumar wasn’t able to get any more specific on completion dates or the number of affected home buyers. Mint was directed to Kumar after seeking to reach Manoj Gaur, executive chairman of JAL.
While buyers face interminable delays, they have seen their payments increase due to changes in the regulatory policies. In 2010, the government imposed a service tax on construction activity, further penalising home buyers, already coping with relentlessly rising interest rates. Service tax, which was passed on by developers to customers, has led to property costs rising by around 2.6%.
“Since these projects are delayed and still under-construction, we have to pay service tax from 2010," Trehan said. “In an ideal situation, buyers would have been out of the service tax ambit. Buyers are now demanding a fair compensation, as mentioned in their builder-buyer agreements," added Trehan.
Jaypee Greens will provide compensation for delays, Kumar said.
“Each customer has his own date of completion, as per his builder-buyer agreement from the time of booking," he said. “Every such agreement in our case mentions three years and three months of time for possession. Therefore, each customer has a different date. And the compensation that will be given to buyers will be adjusted in the last payable installment."
Given the current liquidity crunch, developers have been going slow on execution, resulting in construction delays and higher unsold inventories, according to a recent study by Gurgaon-based property research firm PropEquity Analytics Pvt. Ltd. As of September 2011, the Delhi-National
Capital Region had the maximum unsold inventory levels of residential real estate at 102,758 units, followed by the Mumbai Metropolitan Region (90,512 units), Bangalore (46,596 units) and Pune (40,734 units).
A Delhi-based consultant who does not want to be named said that developers went slow on construction after 2009, as funds that came into the market in 2005 to mid-2008 had dried up. “Later, in the last part of 2010, the economic situation became uncertain," he said. “Developers are currently facing problems such as a rise in labour cost, shortage of labour and rise in cost of building materials."
Developers are also affected by regulatory bottlenecks such as delays in project approvals and land-acquisition related uncertainty (especially in Noida and Greater Noida).
The PropEquity study estimated that the delivery of 480,000 residential units across affordable, mid and luxury housing segments, scheduled for completion in 2011-13, will be delayed in 11 cities. The cities mentioned in the study are Gurgaon, Noida, Greater Noida, Mumbai, Navi Mumbai, Thane, Pune, Bangalore, Chennai, Hyderabad and Kolkata (east).
devesh@livemint.com
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