How New Real Estate Companies Can Be A Catalyst To Revive Stalled Projects

While real estate happens to be one of the key sectors in India, stalled projects continue to be a matter of concern. Particularly cities like Pune, Hyderabad, NCR, Mumbai, Lucknow, Chennai, and Bangalore have witnessed a number of projects under this category. Given that many buyers already pre-book their apartments in these projects, stalled projects haunt these millennials.

Delayed or stalled projects have bothered buyers over the last decade. Currently, more than 5,00,000 residential projects in India are stalled. This has blocked as much as INR 4.48 lakh crores. The NCR tops the list for this poor record, with as many as 1,13,860 stalled projects. The MMR (Mumbai Metropolitan Region) has 41,720 such units. People who have already booked their apartments in Noida and Greater Noida are also facing the heat. These two locations have more than 1.65 lakh delayed or stalled apartments.

What causes residential projects to be delayed or blocked?

The traditional or unregulated approach to the real estate market often leads projects to be delayed or stalled. The developers are sometimes riddled with disputes, that ultimately have a bearing on the progress on the projects. Also, the banks sometimes refuse to finance purchased land. As a result, the builders need to transfer funds allocated for one project to another. The process continues until they find themselves cramped for funds. In recent years, NBFCs have also turned out to be unreliable as a source of funding.

Due to all these reasons, builders fail to deliver the projects on time. Some buyers need to wait more than a decade after investing the booking amount. On the other hand, some owners need to shell out the EMI even when they don’t own the property.

 What can be the viable solution to these issues?

The Union Cabinet has come up with an Alternative Investment Fund (AIF) worth INR 25,000 crore. This fund will bail out around 1,600 stranded projects across India. Besides, new real estate developers need to revive these stalled projects. Many of these developers are working on the stranded ones, paving the way to property possession by the rightful owners. Therefore, underperforming developers need to entrust the responsibility of finishing the stranded projects to these new developers.