The rising inventory of residential realty with every passing quarter shows that freebies, discounts and even the festive season are failing to impress buyers. Data from PropEquity show that inventory overhang in the National Capital Region (NCR) has doubled to 69 months in October-November 2014 from 35 months in the same period last year. For the Mumbai Metropolitan Region (MMR), it is at 43 months, up from 35 months last year.
Though the December numbers are awaited, PropEquity told FE that a major change was unlikely.
Property markets in key Indian cities continue to remain stressed as sales fall sharply and unsold stocks rise. Around 2.06 lakh residential units remain unsold in the NCR market, which would take more than five years to be fully absorbed, research by PropEquity revealed. The study shows a steep drop of 37% and 38% in absorptions in October-November 2014 from April-June and July-September, respectively. The pile-up in MMR, though still high, has tapered during the last few months of 2014 — the unsold stock stood at 2.09 lakh units, down 2-4% from the previous quarters of the year. This will take three-and-a-half years to sell.
Interestingly, while the unsold stock in NCR and MMR is around the same level, aggressive launches in the NCR and relatively slower absorptions will mean the market will take more time to sell. In MMR absorptions are falling, and so is the number of units getting launched.
On a y-o-y basis, during October-November 2014, there was a 72% fall in the number of units launched in the MMR to 6,447. In the NCR, the number of units launched remained flat at 12,265, data show.
Knight Frank India, in its ‘India Real Estate Outlook’ report released on Wednesday, expects the MMR market to show signs of recovery over the next six months and reduction in the absorption time. Samantak Das, chief economist & director of research, Knight Frank India,said, “On the back of better consumer sentiments and moderately improved absorption in the second half of 2014, developers have taken cognisance of the lower-than-anticipated pick-up in sales and curtailed launches.” For the NCR, Das observed that developers have continued to add to supply in the hope that the market will rebound. However, demand has slowed both from end-users as well as investors, he said. While the high prices scared home buyers, investors stayed away due to the weak economy, which has deprived them of meaningful appreciation.
Om Ahuja, CEO, Residential Services, Jones Lang La Salle, India, drew attention to the fact that much of the market in the NCR, Noida and Greater Noida is driven by investors and sees little end-use demand, which has lead to high inventory buildup. “Prices have not moved much over the last few years and most of the unsold stock is in Noida, Greater Noida, the Yamuna Expressway and New Gurgaon,” Ahuja observed.