The top 3 Uttar Pradesh cities within the national capital region (NCR) – Noida, Greater Noida and Ghaziabad – have seen the maximum decline in overall unsold housing stock in two years in the state.

A joint report by ANAROCK and NAREDCO – ‘Addressing Challenges & Progressing Ahead in Real Estate’ – released at the 1st National RERA Conclave in Lucknow on Monday finds that the collective unsold stock in these cities of Uttar Pradesh declined by 26 per cent – from 1,31,150 units in Q3 2017 to approx. 97,270 units by Q3 2019 end.

Greater Noida saw the highest reduction of 27 per cent in unsold stock in two years – from 66,570 units in Q3 2017 to 48,350 units in Q3 2019.

Noida and Ghaziabad each reduced their unsold stock by 24 per cent in the same period; and now have 19,480 and 29,440 unsold units respectively.

Gurugram in Haryana saw its unsold housing inventory increase by approx. 7 per cent, from 52,460 units in Q3 2017 to 55,900 units — the highest unsold stock in the NCR — in Q3 2019.

Delhi’s unsold stock increased by 20 per cent in this period – from 10,770 units in Q3 2017 to 12,960 units in Q3 2019.

According to Anuj Puri, Chairman – ANAROCK Property Consultants, “Noida, Greater Noida and Ghaziabad succeeded in significantly reducing unsold stock primarily because of developers’ conscious restriction of new supply in favour of ongoing project completion. While Gurugram alone saw more than 2,030 units launched in Q3 2019, these three key cities in UP collectively launched a mere 1,610 units. Two years ago, as well, the Millennium City saw new supply of 3,520 units, while the other three cities launched just 1,220 units in the same quarter.”

The report underscores that while other states have diluted policies from the Real Estate (Regulation and Development) Act (RERA), the Uttar Pradesh government proactively revisited its RERA rules to eliminate dilutions and favour aggrieved homebuyers — particularly in Noida and Greater Noida, where several projects are either stuck or delayed.

Parveen Jain, Vice Chairman, NAREDCO said, “The Indian real estate sector continues to face challenges in terms of reduced construction finance and high levels of unsold inventory. However, a slew of reforms and measures introduced by the government in the past few years have started showing positive results. Recovery in sales can already be seen across micro-markets. Real estate regulation and other positive measures by the government have made the market more responsible towards deliveries. This especially reflects in the NCR market, where along with a decline in launches, developers are focused on completion of unsold inventory.”

The new rules, which are expected to bring all ongoing projects for which completion certificates were not issued on or before May 1, 2016 under the purview of RERA, currently await the state government’s approval. Nearly 76 per cent of a total of 17,077 complaints filed with UP RERA till September 2019 relate to promoters and projects in Noida, Greater Noida and Ghaziabad. However, UP RERA has disposed of more cases (over 10,000) since its inception than any other state with active RERA rules in place.

The report also examines the overall macroeconomic environment in India – including FDI inflows, inflation and GDP growth rate – and the challenges the Indian residential real estate sector faces. The major bottlenecks are lack of funds, the fallout of over-dependence on NBFC/HFC funds, and unmitigated burden of delayed/stalled units and lack of interest of private equity (PE) players towards the residential segment.

The report has also suggested short, mid and long-term solutions. It says the government can address the problem of stalled/delayed units by providing additional Floor Space Index (FSI) to developers willing to execute such projects.

Another incentive for executing such projects could be to offer the land banks of defaulting developer at preferential rates. Additional tax benefits and easy access to funding can be considered for developers, who undertake the completion of such projects.