A big relief news has emerged for the buyers of housing projects stuck in limbo for years. The resolution process under the Insolvency and Bankruptcy Code (IBC) has given hope to more than 1.4 lakh homebuyers across the country to get homes. Many buyers have also got possession of the flat. Financially strong companies are taking over and completing the projects of developers facing financial crisis.
After home buyers got financial creditor status under the IBC in 2018, this law has become an important means of resolving stalled housing projects. IBBI has made several suggestions to reform real estate matters — insolvency process at the project level, segregating project proceeds, simplifying claims processing and better coordination between RERA and insolvency courts. The main objective is to get the projects completed instead of sending them into liquidation.
Projects worth Rs 84000 crore have been resolved
So far, 553 cases related to real estate have been accepted under IBC, involving about 2.5 lakh homebuyers. Of these, about 17% cases have been resolved. About 1.1 lakh buyers in 221 cases are still waiting for resolution.
The real estate projects that have been resolved involve an investment of around Rs 84,000 crore, while projects worth around Rs 65,000 crore are still under process. Real estate cases constitute about 22% of all CIRP cases. Big groups like Adani, Reliance, JSW and Prestige have shown interest in the distressed projects.
Adani Realty took command, buyers got houses
Mumbai's Tech Ten was stuck in BKC 2020. Adani Realty took over after the NCLT process, committed over Rs 1,000 crore and 903 buyers have got homes. In BKC Bharat Nagar Slum Rehabilitation, Adani Realty took over the reins after the collapse of HDIL and resumed construction of rehabilitation housing for about 1,000 families.
724 homebuyers got possession in Gurugram Hills-77. Claims worth about Rs 1,250 crore were filed in the Center Court, after going to the new developer, occupancy certificate was received and more than 300 buyers benefited. An Oberoi Realty-led consortium took over Mumbai's Hotel Horizon, while Macrotech Developers acquired V Hotels from the insolvency process.
According to real estate expert Vishal Bhargava, NCLT has restored the confidence of buyers of stalled projects. Developers like Adani and Lodha have given buyers a way to access homes instead of lengthy legal battles.
Legal disputes and delays still a big challenge
But there are challenges also. The time lag between approval of the resolution plan from NCLT and actual implementation is a major challenge for new developers. According to Nikhil Bhatia, MD, CBRE India, real estate projects take a long time to complete and involve claims from multiple parties including homebuyers, banks, land owners. A new developer has to invest huge capital in the beginning and returns come much later.