Realty projects of over Rs 4 lakh crore stuck

Chennai: As many as 5.6 lakh units worth Rs 4.5 lakh crore are stuck or delayed across the top 7 cities due to the cash crunch. Developers are joining hands to complete the projects.

A series of disruptions, including demonetization, RERA and GST, in the last two to three years had hit the real estate business. More recently, the credit squeeze by banks and the NBFC crisis too have added to the woes of the sector and projects are either getting delayed or are stuck.

As per the data from Anarock Property Consultants, 5.6 lakh units worth Rs 4.5 lakh crore are either stuck or delayed in top 7 cities.

Increasingly, developers are joining hands to leverage mutual strengths.

"Cash-starved developers turned to organised and financially-sound players to take over stuck projects by ways of joint ventures, land monetisation and development management contracts across the major cities,' said Shobhit Agarwal, MD & CEO of Anarock Capital.

Developers are exploring alliances to jointly develop projects within revenue-sharing agreements. "This trend is most apparent in Mumbai like the one in which Radius Developers signed a development management contract with DB Realty for their Orchid Heights project at Mahalaxmi, Mumbai,' said Aggarwal.

Further, some of the mid-sized builders who have sizeable land parcels are monetizing them and joining hands with stronger ones for developing projects.

Institutional funding channels are also keen to enter JVs to support distressed projects that hold potential and offer future value. Private equity firms not only fund these financially stressed projects, they also have a say in project designing and pricing.