RERA forcing builders to focus on timely delivery this festive season
Developers this year are focusing on completion of projects and luring homebuyers with special schemes to dispose of housing stockreal estate Updated: Oct 03, 2016 14:46 IST
Unlike the festive seasons of the last few years when demand more or less remained robust and developers went on project launching sprees, this year very few new launches have been planned. This clearly indicates that the real estate market has finally matured, albeit after a lot of struggle and sluggishness. With the Real Estate (Regulation and Development) Act 2016 norms laying emphasis on completion of projects and timely delivery, developers this season are focusing on either completing projects or luring buyers with special schemes for available ready-to-move-in housing stock.
Some developers with delayed projects are now looking at joining hands with buyers to complete housing blocks by opening escrow accounts for each tower in a project to ensure that the money collected is used specifically for completing it. Earlier this week, both the Noida Authority and Greater Noida Authority announced they were considering the opening of joint accounts with real estate developers to ensure faster delivery of projects and see to it that homebuyers’ money went into completion of those projects and was not diverted.
About holding back new launches, Praveen Jain, chairman and managing director of Tulip Infratech and president of NAREDCO (National Real Estate Development Council), said the Gurgaon market would primarily see more developers focusing on completing and handing over projects this season. New RERA rules would be ready by February-March next year and builders were wary of its punitive clauses.
“Many projects in the city were delayed due to issues such as financial constraints and ban on use of underground water. During this festive season, we as a company, are offering a 10% off on over 600-odd ready-to-move-in units in our project, Tulip Violet, in Sector 69,” he says.
Real estate experts say that many developers are launching new projects in areas where they’ve recently received possession of land or where there is demand for new stock and not in areas where there is oversupply.
Lotus Greens Developers Pvt Ltd is launching a project in Sector 150 in Noida in mid October. The company has a land bank of 300 acres which is to be developed through joint ventures and development management agreement models with Tata Housing and Godrej. This month, it will also launch 800 apartments spread across 20 acres. These will include 2 and 3 BHK units to be offered for Rs 4,500 per sq ft to Rs 5,000 per sq ft.
And what about projects that have not been completed and delayed for years? For its project Lotus Zing, the company is planning to open escrow accounts for each block in their unfinished projects, with the help of buyers. “We have reached out to
almost 2,500 homebuyers who have units in 15 towers of the project Lotus Zing and one commercial project. We will be opening escrow accounts with the welfare association that is working closely with us. Instead of fighting a battle in court for delay in completion of the project, we are trying to collaboratively create cash flows from existing customers. The balance amount due from the buyers will be collected in a tower escrow and representative from each tower will be the guardian of the escrow account. What could have taken over two years to complete and deliver may be completed in just about a year. The company has already completed two towers in the last four months through this method,” says Vidur Bharadwaj of the 3C Company.
TDI Infratech is planning to launch its 110 acre integrated project called Connaught Estate (designed on the lines of Connaught Place) in Central Panipat. “This will be an integrated development. The first phase, to be launched during the Diwali season, will see the launch of plots and floors,” says Ravinder Kumar Taneja, director of the company.
Gaursons is offering a special package for its 500 units in the range of Rs 50 lakh to Rs 75 lakh. The festive offer includes free parking, power backup, stamp duty charges etc.
This scheme is being offered for three projects – two located in Greater Noida West and one located in Rajnagar Extension, informs Manoj Gaur, MD, Gaursons.
Real estate experts point out that buyers need to be careful about builders planning to launch new projects this season. They should carefully study the projects completed by the builder and the backlog he has.
“This is to ensure that the money collected from new launches is used only to construct new projects and not diverted for completing older projects,” they say.
Samantak Das, chief economist and national director, research, Knight Frank (India) Pvt Ltd, says that there are currently over two lakh unsold units in Delhi NCR.
New supply/new launches in this market will largely be dictated by the location and the status of unsold inventory in the area. Places with massive unsold inventory may not see too many new launches, he says.
“One may see project launches in areas where there is potential for new projects but not in overheated markets. It is not enough to launch new projects. There is a need to sustain them beyond the festive season. Buyers are advised to put in money only in those properties/projects where the developer has demonstrated his ability to deliver under stressful market conditions,” he adds.