PE investments dropped by 42 percent in the six months ended June compared to the same period a year ago

THREE UNDISPUTED and related facts stare the real estate industry in the face — a large number of undelivered residential projects, a significant drop in new launches and chary home buyers turning increasingly wary of investing in new projects. Together these ground realities have skewed the market sentiment of the realty industry.

Manoj Gaur, managing director of the National Capital Region (NCR)-based Gaursons India, feels the delays in possession of new homes have impacted market sentiment. A developer in Gurgaon says contractors have been asking for upfront money to restart construction work and laments that “funds are scarce”.

Supertech chairman R.K. Arora says developers are not solely responsible for delays in housing projects, but they are the ones who have to face customers. “A constant dialogue with buyers does help improve sentiments,” he says. Anil Sharma, chairman and managing director of Amrapali, believes that market sentiment will improve and buyers will pay their dues as soon as they get possession of their property.

Last year, a report by real estate analysts and researchers Knight Frank pegged the number of undelivered residential units at over seven lakh. This year, their report pegs the number at over 6.5 lakh units. Of course, builders, developers and real estate companies dispute these numbers and dismiss them as exaggerations.

Incidentally, several industry reports tell similar tales of delay and undelivered residential units. January data by real estate research firm Propequity, showed that about 7,300 residential projects of the 9,500-odd projects launched between 2008 and 2010 were still incomplete. More than 2,500 of the delayed projects were located in the Mumbai metropolitan region (MMR), followed by Pune, Bengaluru and the NCR.