The government has announced a INR 25,000 crore fund to rescue stuck projects, and a lot is currently at stake for Indian residential real estate. As many as 19 lakh units across the top 7 cities are under various stages of construction as on Q3 2019 end, reveals ANAROCK research. These include stalled, delayed and all ongoing under-construction units. 

Further analysis reveals that out of these 19 lakh units, nearly 5.76 lakh units were launched in 2013 or before. Given that the typical time required to complete a project does not exceed 5 years, these units can be categorised as ‘chronically delayed’ or 'stuck' inventory. The remaining 13.24 lakh under construction units have been launched between 2014 and Q3 2019 - which is nearly 77% of the total 17.12 units launched during this period. 

MMR and NCR together comprise a whopping 60% share of the total under-construction units across the top 7 cities. 11.29 lakh units are under various stages of completion in these two top cities alone. 

Whether the announced fund it will suffice to unfetter all this inventory is a big question mark. As it is, financing options including banks and NBFCs have dried out and PE investors prefer commercial real estate. However, the approved funds can rescue lakhs of homebuyers who have invested in stuck projects.

Under construction stock city-wise 

• MMR currently has the highest under-construction stock with more than 5.88 lakh units – 31% of the overall under-construction stock across the top 7 cities. Of this, nearly 2.10 lakh units fall in the ‘chronically delayed’ category.
• NCR is close behind with 29% or over 5.40 lakh units in various stages of construction. Of this, 2 lakh units are chronically delayed because these were launched in 2013 or before.
• Pune has more than 2.97 lakh units in various stages of construction, of which 95,000 units are 'stuck' (launched either in or before 2013.) 
• Among the three southern cities,  Bangalore has the maximum under-construction stock as on date with more than 2.28 lakh units, followed by Hyderabad with nearly 72,300 units and Chennai with 64,300 units. Collectively, only 16% of the total under-construction stock in these cities is chronically delayed (as against NCR and MMR, where a significant number of units fall within this category).
• Kolkata currently has more than 95,100 units under construction, of which merely 13,000 units are excessively delayed.

More immediate relief needed for the sector 

Here are the immediate measures the government should undertake to re-infuse confidence and further revive the housing sector:

• Increase the price consideration of affordable housing to INR 1 crore in large metros
• Clarify and expedite the timelines for releasing the funds and actual implementation
• Announce operational guidelines in terms of geography, the scale of development, progress of construction, asset classification, developer eligibility, etc. 
• Announce details of the AIF's professional asset managers 
• To get private players to participate in completing stalled/delayed units, provide tax sops and additional FSI benefits to developers interested in them taking
• To bolster demand in Indian residential space, provide additional tax benefits to home buyers of all budget segments – not just to first-time home buyers and the affordable segment.
• Relax the 70% norm for escrow deposits in under-construction projects
• Relax/remove GST for at least 6 months