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Over 2,600 Karnataka Real Estate Projects Delayed, Rs 6 Bn Refunds Owed

2025-06-06

More than 2,600 real estate projects across Karnataka have missed their scheduled completion deadlines, with many now facing indefinite delays. Bengaluru is the worst-affected city, accounting for 1,301 stalled developments. Additionally, 1,007 projects have applied for deadline extensions, which are currently under review, according to data from the Karnataka Real Estate Regulatory Authority (KRERA).

KRERA has issued a public notice warning that registration periods for several projects have expired and remain unrenewed, cautioning buyers that dealing with these projects carries risks.

Experts attribute these delays to several factors. Regulatory hurdles remain a leading cause, as developers struggle to secure multiple government approvals related to environment, land use, and local municipal clearances. These processes often extend over months or years, significantly delaying construction start dates.

Financial constraints also play a critical role. Developers usually depend on customer advances and loans to fund construction, but slow sales and tightening financing have caused many projects to stall. In several cases, funds have been diverted to other developments, resulting in cash flow shortages and further delays. This problem has worsened in recent years as large real estate companies grapple with rising debt and liquidity challenges.

Poor planning and weak project management compound the situation. Some builders launch projects without adequate feasibility studies or underestimate costs and timelines, which leads to execution difficulties later.

Karnataka developers currently owe homebuyers approximately Rs 6.67 billion in refunds due to delays in apartment handovers, according to official KRERA records as of 31 December 2024. KRERA approved 1,660 recovery claims totalling Rs 7.6 billion, but refunds have been recovered in only 233 cases, amounting to Rs 918 million—just 14 per cent of the total recovery orders issued.

Pending recoveries stood at over Rs 4.86 billion at the end of January 2024 but climbed

sharply by 37 per cent to nearly Rs 6.67 billion by December.