2023 to see 5.6L homes completed in top 7 cities

Mumbai: While 2022 set a new benchmark of residential sales, 2023 is likely to be a record year for project completions. The Real Estate Regulation and Development Act (RERA) has laid down strict guidelines for project completions, mandating that that developers must complete residential projects within the timeline specified in the agreement with their customers.

Project delays were historically the bane of the Indian housing sector, putting homebuyers to enormous inconveniences and often considerable, unwarranted financial strain.

Santhosh Kumar, Vice Chairman – Anarock Group, says, “As per scheduled completion records, approximately 5.6 lakh homes are likely to be delivered across the top seven cities in 2023. This is an increase of 39 per cent over the previous year, and a major milestone as the Indian residential real estate segment crosses the 5-lakh deliveries mark for the year. From a humble volume of 2 lakh units’ completion in 2017, annual completions will rise 2.8X for 2023.”

National Capital Region (NCR) is all set to lead the pack with approx. 1.70 lakh units to be completed in 2023, accounting for an almost 30 per cent share of the year’s the deliveries pipeline. This is a 97 per cent hike over 2022. Coming in second is Mumbai Metropolitan region (MMR) which is expected to account for a 24 per cent share. Hyderabad’s project completion share is just 4 per cent of the top seven cities but will notch a massive 104 per cent increase over 2022.

Apart from the stringent RERA rules, developers have other compelling reasons to meet their project completion targets: Better cash flows enable smoother construction: Increased sales volume, indicating an uptick in housing demand, has led to better cash flows which allow developers to focus on completing their projects.

Managing input costs: Input costs are rising incessantly, and developers already operate on very slim profit margins. Project delays result in even higher input costs.

Alternate Investment Funds (AIFs) aiding project completions: Several alternate investment funds funding cash-positive stuck projects are also adding to the high volume of completions. Since its inception in 2019, the SWAMIH (Special Window for Affordable and Mid-Income Housing) Investment Fund provided final approval to 130 projects cumulatively valued at Rs 12,000 crore and enabling the completion of 20,557 housing units.

Tech-enabled construction techniques: For many years, the Indian construction sector used conventional construction methodologies and processes. The advent of cost-effective and efficient technologies has changed the scenario. Approximately 66 per cent of Indian construction companies are now prioritising digital transformation.

Despite the optimistic anticipation of a new project completions benchmark in 2023, there are some factors that can challenge it. For instance, the prevailing uncertainty in the global economy owing to geopolitical conflicts, and potentially untamed inflation, can result in huge cost increases. Nevertheless, India’s leading real estate developers have risen above all odds in the past 2-3 years – this new project completion record seems attainable.