Why is the Real Estate or Property Market in India on a decline? Are the policies of Modi Government to be blamed for a slump in Property Market in India? Why are big Real Estate companies in India not able to deliver projects in time? EurAsian Times analyses the Property Market in India.
Buyers in the National Capital Region of Delhi are in a fix as their investments in new real estate projects are stuck. Over the last six years, Unitech builders have kept their buyers on hold while delaying the Noida projects month after month. The buyers have now sought help from the Supreme Court against the builders seeking a refund of their hard-earned investments in real estate projects.
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A 34-year-old resident of Noida (in the periphery of the Indian capital New Delhi) has already paid one million from his savings while taking another loan of INR 500,000. He is now among hundreds of angry buyers who have filed a case against the Unitech builders leading to the jailing of the founders on account of cheating.
It’s been 10 Years and I have still not got possession of my apartment. No Construction is going on the Project and all my saving are doomed – Disgruntled customer
However, it is noteworthy here that Unitech Ltd. is not only the construction company in the area that has been taken to court by buyers. The company is accompanied by Amrapali Group and Jaypee Infratech Ltd., who collected funds from buyers and then left them high and dry with no ready flat to move in. The USD 126 billion worth of property market is now slipping as the falling trust among buyers is on the rise. Even companies that follow the legal norms and are ready to offer flats are not finding any takers. The sales in the industry have hit a seven-year low while property rates are seeing a huge meltdown.
Property Market in India Recorded 3-15% Decline
With fewer laws in the past to protect the homebuyers in India, the industry has recorded a rise in vulnerability among the buyers. With the economy slowing down, the buyers have started backing out of buying new houses. The real estate market in India is no longer viewed as the best investment option among Indian buyers.
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Following demonetization and tightening of regulations for builders to protect the interests of buyers, the real estate companies were left with massive debts and with shortages of cash. Property prices have seen 3 percent drop in the top six cities of India, while it went down as low as 15 percent in other cities. Recovery for the same is expected to take a much longer time than expected as the courts are siding with the buyers. Unitech builders are currently challenging a court order asking them to pay 12 percent interest on the buyers’ investments.
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Jaypee Infratech, on the other hand, has been accused of diverting funds for which a court has ordered a financial audit. Their advisor has however denied the charges adding that the delays in project deliveries were caused due to shortages of labor and other regulatory setbacks. The advisor further added that the company will be delivering around 5,000 apartments by March 2018. Amrapali Group is in deep waters as the company is now facing insolvency proceeding. The lawyers for the company have however assured the courts that the company will fulfil its commitment to the buyers and will deliver the houses in time.
Not Just Delhi, Property Market In Fix In Other Parts Of India Too
The troubles in paradise for the property sector is not just restricted to the National Capital Region. The city of dreams Mumbai had last year recorded a massive decline in property rates and demand. Top 8 Indian cities, on the other hand, recorded a 41 per cent drop in residential launches.
