Real estate developers sharpen the focus on timely delivery
With the implementation of RERA (Real Estate Regulatory Act), the soul and heart of the real estate sector lie in the hands of the investors and buyers. Gone are the days when buyers had to wait for their abode despite the completion of the promised time period by builders. Due to the strict norms laid by the RERA, builders are left with no choice but to meet the deadlines on time.
In fact, the main motto behind the implementation of RERA is to bring about transparency and timely completion of residential and other realty sector projects. This has made investors and homebuyers more aware of their rights. Now, ‘Customer’ will be at the center of attraction of the whole real estate business. It will shape the way the realty sector operates now and make it more accountable.
Earlier, home sales were a way important than delivering what was promised in the eyes of builders and developers. But the stringent norms laid by RERA will throw light on the working of those builders and developers who are honest to the homebuyers and investors. It will also single out those builders who claim to be the leaders but fail to deliver the desired output on time. According to Amit Kumar, who is the CEO of the Propertyxpo, “Meeting project delivery targets is a matter of survival for developers today. There are penalties today and the regulator has the power to take over the project.” It is evident from the fact that today, a lot of leading developers and builders are fighting court cases due to the complaints filed by the disgruntled customers regarding delays in completion of their abodes by the builders.
Over the past few years, many leading real estate developers and builders in the NCR (The National Capital Region) are currently involved in the insolvency proceedings that are initiated against them due to the four-year slowdown in the real estate market. Another hurdle in the path of timely completion of the real estate projects is the ailing condition of the real estate sector. Jaiprakash Associates Ltd. (JAL) launched its Wish Town Township Project in Noida in 2007. It had a total of 32,000 units but only 8000 units have been completed till now. There are still 24,000 homes left to be delivered to their respective buyers and investors. Noida based Amrapali Group sought the Supreme Court’s Permission in February regarding the involvement of co-developers in order to fulfill their promise of completion around 41,000 flats to buyers.
Rajeev Talwar, who is the chief executive of the real estate firm DLF Ltd. was quoted as saying, “ In the boom years, developers promised that they could deliver a project in three years, a promise which can never be met because it takes 5-6 years. Courts have stepped in, launching projects has become increasingly difficult with the RERA Regime pushing firms on building and selling homes to existing customers.”
When there was a rising phase for the real estate sector in 2005-08, many realty estate firms promised their buyers regarding the delivery of homes, but even after ten years, they are unable to do as they promised. This is due to the global economic slowdown which further added to the woes of the ailing sector. Still, if the real estate firms would have been honest then also it could have delivered the homes on time. It can be said as business was back to normal by 2009, and until 2012, it was showing robust growth. This led to the significant loss of faith between buyers and developers.
Even RK Arora, who is chairman of the Supertech Ltd. stated that “There is a lot of negative sentiment among homebuyers today over not getting possession of homes on time. The real estate market is down with no price appreciation and slow sales. We have had delays in our projects which is why we decided let’s complete and deliver projects that were launched 4-5 years back. In fact, Delivery is more important because the final payment of the buyer comes on possession of homes and generates liquidity and we expect to generate Rs. 1000 Crore through it.”
Currently, the main focus of the real estate builders should be to fulfill the promises they have made earlier instead of taking up new projects. As further delay would lead to clear-cut penalties by the courts and they may have to face difficult circumstances. Delays are also leading to degrading trust among new buyers and investors. Even Ram Walase, who is managing director and CEO of VBHC Value Homes Pvt. Ltd. also agrees to the aforesaid mentioned fact and admitted that it is the need of the hour to focus on accelerating the project delivery. One needs to keep up the execution pace on the ground, have the financial back-up to complete projects without relying on customer payments and have all the approvals in place.
After such a harsh blow to the trust of buyers and investors, the return of confidence of buyers to builders would take a long time. Homebuyers faced a lot of delivery issues which led to the shift of buyers towards ready-to-buy homes rather than under-construction ones. Abhishek Lodha, who is the managing director of the Lodha Group was quoted as saying, “In the last three years, we have put in even more resources towards execution and delivery. Our delivery record establishes the credibility we have as a developer. We understand that once a customer gets a home, they tend to buy more.” He also admitted that delivery and executing projects on time is expensive. Lodha Group has spent Rs. 4200 crore on construction payment alone in 2017-18.
So, finally, it is clear that under stringent norms set by the RERA, buyers can take a sigh of relief as an issue of timely delivery of projects is finally being taken into consideration by the builders and developers. Now, it can be said that it’s a time for regaining the faith of homebuyers by developers.