DEVELOPERS’ DEFENCE

Most developers depend extensively on advance payments to fund the development of their projects. Kumar Gera, chairman, Confederation of Real Estate Developers Associations of India (CREDAI), explains, “The progress of any project depends on the bookings it has received. Thereafter, the project also moves forward based on the advance payments received from buyers.”

Pointing to the other side of the coin, Sunil Jindal, CEO, SVP Builders points out while many projects are getting delayed due to shortage of funds, payment defaults by buyers have also increased. Many investors, who were actually speculators, entered projects hoping to exit at a profit after paying just a couple of instalments. This strategy backfired once property prices began falling. “When buyers find that they will not be able to sustain in a project, they start delaying or defaulting on their payment. This phenomenon has picked up in the last few years. Development of projects does depend on buyers’ money too, and delays and defaults in payments affect its progress.”

Some property experts believe that developers’ inability to complete projects is not the sole reason for the increasing number of requests for cancellations. Other factors are also at play. Shobhit Agarwal, joint managing director-capital markets, Jones Lang LaSalle Meghraj, says, “The fact that property rates are correcting and buyers wish to conserve finances is equally, if not more, responsible for cancellation requests.” He adds that cancellation requests are not specific to only certain developer groups but a pan-India phenomenon.

BUYERS UNITE

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