The real estate industry was hit hard in 2015 by poor sales of residential projects and fewer launches, resulting in a surge in unsold inventory. The year ended with the lowest number of new launches and sales volumes across the top eight cities of the country since 2010, according to global property consultant Knight Frank.
While the sales volume during 2015 was similar to that in 2014, new launches fell sharply by 21% across the country, Knight Frank said in the 4th edition of its half-yearly report — India Real Estate. Last year the sales volume stood at 2.64 lakh units, while in 2014 it was 2.74 lakh.
The current unsold inventory levels stand at over 690,000 units and it would take close to three years to exhaust. National Capital Region (NCR) is the worst affected residential market in India, where both absorption and new launches declined. It is expected to take more than four years to unwind the existing unsold inventory of 206,000 units in NCR. This is significantly higher than the average time — of less than three years — that other cities will take.
In terms of new launches, NCR, Mumbai and Bengaluru witnessed a sharp drop of 20%, 36% and 27% respectively during 2015. While sales grew by just 3% during the second half of 2015 compared to the second half of 2014, launches continued to fall by 13%. The recovery in sales was largely on account of the better-than-expected sales volume during the festive season.
Steady sales volume and restricted launches have helped in bringing down the stress level in the residential market by some degree in the second half of the year, Knight Frank said. While Mumbai leads in this unwinding of unsold inventory, Hyderabad and Pune follow. Pune and Bengaluru continued to be among the best performing residential markets in the country with low quarters to sell unsold inventory and minimal age of unsold inventory.
“The Bengaluru residential market remains one of the best performing markets in India. Although the residential market did witness some lows with 13% drop in launches YoY, this has in turn helped in bringing down the stress by cutting down the inventory. We presume upward pressure on prices with an expected 7% weighted average price hike in the next six months,” Satish B N, executive director, South, Knight Frank, said.