Too slow for the urban march: Litigations and the real estate market in Mumbai, India

Abstract

We use data from the universe of approximately 3000 ongoing formal real estate projects in Mumbai to show that 27.3% of the projects and 42.9% of the built-up space is under litigation. Average construction time is 8.5 years. Using OLS and matching techniques, and controlling for other factors determining time to completion including location, developer experience and project size, we estimate that litigated projects take approximately 20% longer to complete than non-litigated projects. A variety of robustness tests are consistent with this finding. We address potential endogeneity concerns using an instrument - the neighborhood’s propensity to sue. The increase in time to completion increases the total cost of building by at least 30%. We identify a small number of litigated projects in the Bombay High Court dockets and find that so-called Public Interest Litigation, litigation begun by people outside the contractual process (i.e. not apartment purchasers, residents, or contractors), appears to be responsible for a significant share of project litigation.