Bhiwadi, a fast-growing industrial town near Delhi, is leading the country in stalled real estate projects as per a recent survey finds. This astonishing story has disheartened homebuyers and dealers in the area. Because it directly shows the main problems that the real estate sector in Bhiwadi as well as in the whole country is going through, for instance, a slowdown in the construction of the house.
In this blog you will be exposed to the reason for this condition, the consequences for both investors and buyers and the solution to this problem becoming more prevalent will also be explored.
Why Bhiwadi is Leading in Stalled Projects
There are several key reasons why Bhiwadi has emerged as the city with the highest number of stalled real estate projects:
- Overambitious Development: Besides its closeness to the National Capital Region (NCR), Bhiwadi has been a place on the radar for developers who want to earn from the increasing demand for ethically-priced buildings. Nonetheless, a lot of those projects were kick-started before market surveys and feasibility studies were conducted, which resulted in overstocking and, in the last instance, inactivity.
- Regulatory Hurdles: India’s real estate sector has witnessed many regulatory changes in the recent past, including the Real Estate (Regulation and Development) Act (RERA) which was enforced by statute. While RERA was a consumer protection tool, it also caused approval delays due to developers having to get used to the new rules and policies.
- Funding Shortages: There are several Bhiwadi builders who had to face a crisis of funding because of the cash flow and the nonavailability of loans. As a result, those property development projects had been unable to proceed further and a few buyers ended up in a serious dilemma.
- Pandemic Impact: The COVID-19 still strikes. The confinements and the following economic recession substantially contributed to the shortage of available laborers, the disruption of the supply chains, and the adjustment of project cycles, which led to more considerable delays and finally, many of the undertaken projects were stopped indefinitely.
What Does This Mean for Homebuyers and Investors?
The rise in stalled projects has several significant implications for both homebuyers and investors:
- Delayed Possession: Homebuyers who have already invested in these stalled projects face uncertainty regarding when they will receive possession of their homes. For many, this also means continuing to pay rent while managing EMIs on home loans, creating a financial burden.
- Loss of Confidence: Investors and buyers in Bhiwadi are likely to lose confidence in the local real estate market due to the high number of unfinished projects. This lack of trust can further depress the market, making it even harder for developers to sell properties and recover their investments.
- Decreasing Property Values: The large number of unsold and unfinished units can lead to a drop in property values, as supply continues to outpace demand. This is especially concerning for investors who were hoping for capital appreciation in Bhiwadi’s real estate market.
Steps to Address the Issue Stalled real estate
While the situation may seem bleak, there are several measures that can be taken to revive Bhiwadi’s real estate market and prevent further project delays:
- Government Intervention: The government could be vital in finishing the stalled projects by, for instance, giving developers loans on better terms or even granting them money. In addition, new laws and financial benefits could be enacted to boost construction.
- Stricter RERA Enforcement: While RERA has already been implemented, stricter enforcement and timely intervention from regulatory authorities can ensure that developers complete their projects as promised. Penalizing non-compliance can deter developers from leaving projects unfinished.
- Alternate Funding Mechanisms: The introduction of new funding mechanisms, such as real estate investment trusts (REITs), can help provide much-needed capital to developers and give buyers more confidence. Banks and financial institutions can also consider offering low-interest construction loans to developers.
- Developer-Buyer Collaboration: Homebuyers can come together to form associations and collaborate with developers to find solutions, such as self-funding the completion of certain parts of the project, or restructuring payment plans to facilitate the construction process.
Conclusion
The revelation that Bhiwadi is leading India in stalled real estate projects is undoubtedly concerning, but it also presents an opportunity for the industry to learn from past mistakes. By addressing the root causes, such as overambitious development, regulatory challenges, and financial mismanagement, Bhiwadi can regain its position as a thriving hub for real estate investment.
For buyers and investors, the key takeaway is to stay informed, conduct thorough due diligence before investing, and remain proactive in engaging with developers and authorities to ensure timely project completion.
By taking these steps, Bhiwadi can overcome its current challenges and reemerge as a key player in the NCR’s real estate landscape.
