Delay in statutory approvals hits real estate projects: Survey

C Shivakumar

Chennai:

Delay in statutory approvals, high cost of real estate finance born by developers, shortage of skilled labour and lengthy process of land acquisition are the major reasons for construction delays in real estate projects, according to he Confederation of Real Estate Developers' Associations of India (CREDAI)-Jones Lang LaSalle Real Estate Transparency Survey 2011.

The survey said a majority of developers felt improvement in the efficiency of urban local bodies by streamlining the approval procedures would benefit the construction industry immensely through saved time and costs.

The survey also found out that with banking institutions attributing a higher risk to the sector, borrowing has become expensive, and accompanied with slow sales, is hurting the cash flows of developers.

It also blamed the National Rural Employment Guarantee Scheme for shortage of workers in the construction sector.

“NREGS has been one of the reasons in the past two to three years for the reverse migration of workers from metropolitan cities to rural centres creating shortage of labour in the construction industry,” the survey said.

The process of land purchase in Indian cities is extremely lengthy and cumbersome for larger township projects, as there are often multiple landowners and the transaction process remains shrouded in non-transparency, the survey observed.

It also felt that under the proposed bill on Land Acquisition, Rehabilitation and Resettlement (LARR), obtaining land through the “acquisition route” might result in higher costs due to provisions for higher benefits to be provided to displaced landowners.

However, this might also result in a lesser time of acquisition, as landowners would be more willing to sell their land, it observed.