When a broker friend called and said he was shutting his office and working out of home because of the miniscule number of transactions happening every month, it was time to sit up and take stock. What has happened to the Indian real estate buyer? Nothing seems to awake him or her from the retail slumber.
The reasons are not very difficult to find. At least 70 per cent of projects in the NCR are delayed. The rest of the country is marginally better. Home loan interest rates had been hiked when inflation went up significantly. The drop of 30 basis points by key banks seems too little too late for them.
Now look at the ground reality. Sudip Gupta bought a property with a leading developer in Noida. The project is due for possession but there are serious gaps in the finishing. However, the developer says he will complete only after the final payment is received. Typically final payout is made when the apartment is ready for possession, not to make the apartment ready for possession. However, despite resisting for a while, Gupta finds that the developer has run into some problems and many banks are not lending to the project. So he has no option but to quickly seek his disbursal and take possession rather than wait and fight it out.
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A buyer in ‘A’ project in Manesar by the market leader in Gurgaon was startled to find that the developer issued a notice to buyers that the apartments have secured the completion certificate. The reality on the ground is that the structure is complete and the entire finishing of the walls, floors and fixtures remains. So how did the Haryana authorities issue the certificate of completion to the developer? There are no clear documented norms in Haryana about what constitutes completion. This has been identified and exploited by developers. Many other developers are following suit.
The issue here is that developers are seriously pressed for cash. In such a scenario they are exploiting all loopholes to ensure that the money comes from the buyers even if the projects are not liveable. These practices do not instill any faith of the buyer in the real estate sector and they prefer to hold investments or buy closer to or after possession.
The ground realities will change only after the industry starts respecting the buyers. The Magicbricks IIM-B Housing Sentiment Index suggests that sentiments are still weak and buyers were willing to wait till at least October end before taking the decision to buy. That too would depend on how dependable the industry turns out to be. The ones who are following healthy practices and handing over possession or completing projects on time need to stand up and shout that they are doing so. Else, the entire industry will be tarred with the same brush.