The national capital region (NCR) tops the list of delayed delivery of real estate residential projects. Of the projects launched between January 2007 and June 2009 in the affordable housing segment across NCR, only 8 per cent could be completed by January 2012, said a report prepared by PropEquity, a real estate analytics and research firm. Mumbai and Bangalore performed much better, completing 63 and 67 per cent of the projects respectively launched during the same period.
NCR lagged behind Mumbai and Bangalore even in the mid-end and luxury segments in terms of delivering projects. NCR could complete just 24 per cent of the projects against 64 per cent and 69 per cent in Mumbai and Bangalore in mid end category.
Overall, 45 per cent of the projects launched in the same period are still under construction.
“Several developers launched slew of projects pre 2008 crisis and are now facing severe funding glut, increased borrowing costs, falling global macro-economic trends and dwindling housing demand”, the report said.
According to the report, approximately 320 projects were launched in NCR during this period, 1030 projects in Mumbai and 570 in Bangalore.
In the luxury segment, in NCR, only 28 per cent of the projects could be completed so far, against 52 per cent and 55 per cent in Mumbai and Bangalore. In Mumbai and Bangalore, luxury segment was the most impacted in terms of completion of projects, when compared to affordable and mid-end segments.
Affordable housing has been defined as a unit priced up to Rs 35 lakh in NCR and Bangalore and up to Rs 45 lakh in Mumbai. Units priced between Rs 35 lakh and Rs 1 crore is mid-end for NCR and Bangalore, and between Rs 45 lakh and Rs 1.5 crore for Mumbai. In luxury segment, units are priced over Rs 1 crore in NCR and Bangalore, and over Rs 1.5 crore in Mumbai.
According to Sanjay Sharma, managing director, Qubrex, the affordable housing segment has seen a delay in 92 per cent of the projects launched between January 2007 and June 2009 due to low margins in this particular segment. The escalation in raw material and labour costs have further dented the already low margins of the developers, he said.
According to an analyst, the margin in affordable housing project is just 15 to 20 per cent, and over 35 to 40 per cent in luxury.
NCR has been the worst hit in deliveries because of the size of the projects, pointed out Sharma. “The average size of the projects in NCR is much bigger than in Mumbai or Bangalore”, he said. The average size of the projects in NCR is about 400-500 units against 100-150 units in Mumbai.
The report also pointed out that Bangalore and Mumbai have less than 12% of residential supply as part of large projects, against 53 per cent in NCR.
As per a Qubrex report, of the projects launched between 2004 and 2007, at least 12 projects have not been completed or delivered at all in Gurgaon, and in six projects developers have given partial possession. The projects not completed includes DLF’s Magnolia, Belaire and Park Place; MGF, The Villas; Unitech’s Harmony, the report said. Among the projects launched between 2008and 2009, at least 16 projects have not been completed yet.
According to Anubhav Gupta, analyst, Kim Eng Securities, a brokerage firm, the financial position of the NCR developers is worse than the realty developers in Bangalore and Mumbai. “Also, in 2007, players like Omaxe, Parsvnath launched projects in the NCR market where there was already an oversupply,” he said.