According to a report by Liases Foras, the number of unsold apartments in Mumbai has reached a record of 84,915 units, up from 80,426 unsold units only three months back. In the Mumbai Metropolitan Region (MMR), which includes Mumbai, Thane, Navi Mumbai and Raigad, the unsold inventory is now at 2.26 lakh houses, against 2.09 lakh unsold units a quarter ago.
However, the numbers do not reveal how many of these units are ready-to-move-in and how many of these are under-construction. There is also a lack of data, vis-à-vis the size of the apartments as against the demand in the market. The situation in Mumbai’s property market today, is that the investors are less active, while end-users prefer to buy ready-to-move apartments or those that are close to possession.
What buyers want
In this scenario, Pankaj Kapoor, CEO of Liases Foras, insists that the builders have no alternative, but to reduce prices. Buyers cannot afford the present rates and are waiting for a price correction. “Even the government has played a spoiler, by hiking the ready reckoner rates and levying multiple taxes, thereby, reducing the scope for builders to reduce prices,” he points out.
Kamlesh Madaan, a local property agent operating out of the western suburbs, feels that many of the projects in the MMR, are in the primary stages of construction and will be absorbed, once they reach a certain level of construction. “Clients are repeatedly asking for smaller-sized units that are nearing possession. However, there aren’t many such apartments available, in today’s market. The problem is more, with the bigger units that are in the initial stages of construction. In the absence of complete data with analysis, such reports could confuse prospective buyers,” Madaan adds.
See also: Mumbai’s real estate hotspots for varied budgets
How long will the inventory pile-up last?
The inventory pile-up, can also be attributed to the slow pace of clearances for projects, as well as the recent hike in ready reckoner rates. Zaheer Majeed Memon, partner, Zara Habitats, maintains that the general economic slowdown and shifting buyer sentiments, also play a role. The risk appetite and the buying criteria of genuine home buyers, have changed in recent times. From buying properties solely for investment, as was the case earlier, people now do so for the practical purpose of occupying the property, he says.
“An end-user’s options, choices and buying capacity, directly affect the demand situation of the market. Today, the market is responding, more to the demand of end-users than the investors. To a large extent, this unprecedented pile-up of inventory, is also category-linked. Factors, such as location, size of the apartments, etc., play an important role in a serious demand-driven market,” Memon elaborates.
Analysts point out that in the current market scenario, each category of housing will have its own rate of absorption, and it remains difficult to predict how long the inventory pile-up will last. Nevertheless, going by the current rate of transactions, experts feel that it may take around eight quarters, before there is more demand and lesser number of units in the market.
Quick bytes
- Number of unsold apartments in Mumbai, rises to 84,915 units from 80,426 unsold units three months ago.
- In the MMR, including Mumbai, Thane, Navi Mumbai and Raigad, the unsold inventory is now at 2.26 lakh houses, against 2.09 lakh unsold units a quarter ago.
- Most of the unsold units are in the primary stages of construction, whereas, buyers now prefer properties that are ready-to-move or close to possession.
- The inventory pile-up can be attributed to policies, taxation, macro-economic uncertainties and demand-supply mismatch.
(The writer is CEO, Track2Realty)
Ravi Sinha is a journalist with nearly two decades of cross-discipline media exposure. He is the CEO of real estate think-tank group Track2Realty. He has been writing extensively on the real estate sector for nearly a decade. Evaluation of real estate brand performance is his expertise and he has immense insight into consumers’ psychograph in the property market.
Twitter: https://twitter.com/ravitrack2media
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