The property market in the National Capital Region (NCR) has witnessed a clean-up and turnaround in recent times. Now, a new crisis seems to have hit the market, with allegations of cheating and defrauding of homebuyers doing the rounds. Mint explains:
What is the latest controversy?
Last week, the Enforcement Directorate (ED) raided the NCR premises of two developers—the WTC Group and Bhutani Infra—and their promoters. First information reports filed by the Economic Offences Wing alleged cheating, criminal breach of trust and defrauding of hundreds of homebuyers. Documents worth over ₹3,500 crore, collected from investors against projects in NCR, were found. Buyers were lured into investing, but the money was allegedly siphoned off and the projects were undelivered. Documents that ED found also showed transactions and transfer of assets between the two groups.
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Hasn’t the NCR been hit by scandals earlier?
A string of real estate scandals had rocked NCR over the last decade. Some of the region’s largest developers engaged in years of unchecked real estate expansion, a land-buying frenzy, and diversion of funds away from projects. Hundreds of home projects moved at a snail’s pace, or were never delivered. But, things changed post the covid-19 pandemic, as there was a revival in customer demand after a prolonged slowdown. Developers benefited from a bull run and the return of investors. Reputed builders earned the confidence of buyers yet again. The latest controversy, now, opens up a can of worms.
How have the two firms responded to the ED raids?
Noida-based Bhutani had inked a memorandum of understanding with the WTC for a property transaction. Post the raids, Bhutani issued clarifications saying it had severed all ties with WTC in February, and has no financial or operational connections. It said it is co-operating with the ED in its investigation. The WTC Group is yet to issue a clarification.
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What have been the consequences?
On Tuesday, the World Trade Centres Association (WTCA), which licences the WTC brand globally, said it has scrapped 13 licences held by WTC Noida Development and Spire Techpark due to multiple violations of their agreements. The termination is applicable to the licences held for WTCs in Ahmedabad, Amritsar, Chandigarh, Faridabad, GIFT City, Noida among others. WTC Noida Development and Spire Techpark were found to have “affected the (WTC) brand’s reputation”, WTCA stated.
Could this impact market sentiment?
Two promoters of M3M India, a developer in Gurugram, were arrested by the ED in 2023 in a money laundering case before the Supreme Court gave them bail. This didn’t impact the Gurugram market, or investors or homebuyer confidence. Market analysts cite this to say a single event is unlikely to change market dynamics. Nonetheless, NCR has an overload of stressed projects. While some are still stalled, others are getting resolved. Things are improving but at a slow pace, as per PropEquity, a research firm.
