Mint Primer: Analysing key factors behind housing project completions

What are the completion figures?

Around 86% of residential projects (1,409 projects) launched between June 2017 and 2018-end, after the implementation of RERA in May 2017, are completed. Typically, it takes 4-5 years to complete a housing project, with the exception of large townships. The completions were despite the pandemic-led disruption in construction, according to data released by property advisory Anarock. Chennai led with 107 completions out of 119 launched in this period. Mumbai Metropolitan Region (MMR) saw the most launches at 679 projects, of which 602 are complete. Pune, too, saw 89% project completion.

What was the role of RERA?

RERA has ensured timely delivery of projects, particularly in states where it has been fully implemented. There were major delays, with stalled projects, before the Act came into force. RERA brought in discipline and a sense of accountability among developers. They not only have to declare the expected project completion timeline at the start, but are also penalized for delays owing to factors that are not external or beyond their control. It is not surprising that Kolkata, where RERA was implemented only in 2022, saw only 70% project completion, the lowest among the top 7 cities.

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Has the NCR property market improved?

In terms of delayed and stalled projects, the National Capital Region was the worst hit. But in recent years, tribunal and court interventions and attempts to take over stalled projects by the likes of NBCC Ltd, have led to a clean-up. NCR has seen 74% completion of projects launched during the H2 2017 and 2018, which means 64 of the 84 new projects were completed.

Who are the biggest beneficiaries?

Homebuyers. They’ve been the worst victims, having to wait for years to move in while paying both mortgage and rent. Timely completions and deliveries are a relief and build trust. RERA guidelines have pushed developers to stick to delivery timelines. They also have to ensure customer payments are used only for the projects they are paid for. It has helped that homebuyers, in the last few years, have chosen to buy ready or nearly-complete homes in projects by credible developers to avoid any risk.

So, are project delay woes then over?

Not entirely. Projects still remain stuck due to liquidity issues, non-payment to lenders and litigation, etc. According to the Indian Banks’ Association, there are 412,000 stressed and delayed dwelling units involving ₹4.08 trillion. MMR and NCR have the most. The government’s Special Window for Affordable and Mid-Income Housing (SWAMIH) investment fund, launched in 2019, has revived several projects. But it alone cannot address the problem, given the scale of such projects and the funding needed.