India's real estate sector is grappling with about 500,000 stalled homes, impacting nearly one-fifth of under-construction projects, according to PropEquity. Major cities like Mumbai and Greater Noida are most affected, with delays often stretching three to four years. Despite the government's Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund, which raised INR 15,530 crore, only 32,000 units have been completed. Legal disputes and financial mismanagement further complicate the situation. The Real Estate Regulation and Development Act (RERA) aims to improve transparency, but challenges persist. Enhancing oversight and streamlining approvals are crucial for revitalizing the sector.
Over the past eight years, about 500,000 homes in India are part of stalled real estate projects, leaving many buyers waiting for their houses. According to PropEquity, a data analytics firm, nearly one-fifth of under-construction homes are affected, causing significant delays in delivery. While some homes have been delivered, many buyers experience delays of three to four years. This situation underscores a larger trend affecting the real estate sector, with nearly 2,000 projects stalled across 44 cities.
The recent rise in stalled projects can be attributed to several factors. Samir Jasuja, the founder of PropEquity, pointed to issues such as poor project management, financial mismanagement, and funds being diverted for purposes other than construction. As a result, buyers have been left in a difficult position, often with no clarity on when their homes will be completed. Problems are particularly severe in major cities. Mumbai has the highest number of stalled projects, while Greater Noida shows the largest backlog of undelivered homes.
In response to this growing issue, the Indian government initiated the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund in 2019. This fund was designed to address stalled projects but has faced challenges. Though it has raised INR 15,530 crore, only 32,000 units have been completed in five years, which falls short of the government's target to deliver 20,000 delayed homes annually.
The current situation is further complicated by legal disputes, as many homeowners have turned to the courts in search of justice and accountability from developers. Reports indicate that the judicial system is overwhelmed with real estate cases. According to the latest data, about 1,636 projects in major cities have stalled, affecting over 430,000 homes. In addition to Greater Noida, cities such as Bengaluru and Thane also feature substantially high numbers of stalled projects, creating uncertainty for potential buyers.
The introduction of the Real Estate Regulation and Development Act (RERA) has aimed to improve accountability in the sector. RERA requires developers to comply with project timelines and financial disclosure, fostering a level of trust among buyers. While larger developers may adhere to these regulations, smaller firms often struggle, citing financial challenges that lead to project delays. Experts believe that despite some progress, the high number of stalled projects represents a significant issue, which may take years to resolve.
Industry professionals stress the importance of better oversight and transparency in the real estate sector. An independent third-party audit of projects could help homeowners assess a developer's reliability before making purchases. Moreover, experts suggest that streamlining the approval process for new projects could invigorate the real estate market, providing clarity and confidence to investors and buyers alike. The urgency of addressing these issues cannot be overstated, as they impact not only homebuyers but also the broader economy and housing market in India.
As the country continues to grapple with these challenges, the need for effective solutions is becoming increasingly critical. Improving project completion rates will benefit both the housing sector and the communities waiting for new homes. In conclusion, a focus on transparency, financial integrity, and efficient regulation holds the potential to revitalize India's real estate landscape and restore trust among homebuyers.
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