There are about 2 lakh unsold dwelling units in Delhi-NCR (National Capital Region), which is the maximum among all the major cities in India. In Delhi-NCR, Greater Noida has the maximum share of unsold inventories, followed by Gurugram.
Also, the region has witnessed a 3-5% decrease in average per-square foot property prices over the last one year. The average price was over Rs 4,650 in the fourth quarter last year. However, this has come down to Rs 4,500-4,550. Real estate experts say that prices are likely to remain stagnant for the next few quarters, according to a report prepared by Anarock Property Consultants.
Accordingly, there are 1.80 lakh unsold inventory in Mumbai Metropolitan Region (MMR), Bengaluru (1.04 lakh), Pune (97,000), Kolkata (49,000), Chennai (28,000) and Hyderabad (27,000).
Factors like huge unsold inventory, recent cases of developers’ bankruptcy or insolvency and the large number of stalled projects have made buyers sceptical about the real estate market. What has added to the problem is the delay in execution and dilution of RERA (Real Estate Regulation & Development Act), which has acted as a dampening factor for buyers’ confidence and, therefore, prices are unlikely to increase in the near future, says the report.
“Regarding the price decrease, there are several reasons like excessive delay in project construction and possession, which has hurt buyers’ sentiments, leading to subdued demand. Moreover, there are many projects which have been stalled due to agitations and litigation issue,” says Anuj Puri, chairman of Anarock Property.
On the contrary, the unsold residential property inventory has declined rapidly in South India as compared to other parts of the country. The research findings say that the unsold inventory declined by 21%, 20% and 15% in Hyderabad, Chennai and Bengaluru respectively from 2016. With an overall unsold inventory decline of only 8% in the top seven cities, South Indian cities have bucked the trend. While in 2017, the supply was down by 59% across these seven cities, compared to 2016 additions, these South Indian cities registered an average decline of 75%.
According to Puri, one of the key reasons for this decline was the restricted supply of fresh projects in these cities. The fine equilibrium which developers have achieved in terms of restricting new launches and focusing on clearing unsold units in the end-user driven markets has been a defining factor in South India.
With fundamental growth drivers intact and rising demand for office spaces, these cities are likely to make a faster comeback in the residential segment as well, when compared to their counterparts in the West, North and East India, he said.
