)
Mumbai’s residential markets are in dire straits. About 45% of Mumbai’s under-construction and ready residential properties are unsold due to weak demand and high prices, says a new report.
Nearly 290,000 residential units are under construction in Mumbai while unsold inventory levels are close to 130,000, said the report released by global property consultant Knight Frank today.
Though National capital region (NCR) has twice twice the number of units under construction compared to Mumbai, its unsold inventory level is 26% while Mumbai Metropolitan Region (MMR) is almost 45%. About 35% of Bangalore homes were unsold, Knight Frank said.
Mumbai requires nearly nine quarters to clear its unsold inventory while Bangalore and NCR will take less than six and quarters respectively.
The unsold inventory is mostly in apartments priced at Rs 2 crore and above, around 52% of unsold homes are in this price bracket.
“Unsold inventories in Mumbai is highest among all other cities and depicting a growing trend. We expect a more pronounced price correction which may drive the market to a better equilibrium,” said Dr Samantak Das, chief economist and director, research at Knight Frank.
“Developers are open to negotiation especially in premium segment, reducing prices upto 25% in favout of sizeable up front payment,” Knight Frank said in the report.
Developers, it seems are taking note of unsold inventories. The total number of units launched during January to September 2013 in Mumbai has come down by 28% on year on year basis at 47,500 units. The absorption of units during the same period has come down by 26%.
Lalit Kumar Jain, president of Confederation of Real Estate Developers Association of India (CREDAI) said the unsold inventory numbers are not very high given that developers sell 50% of their inventory during construction stage and 20% during the completion stage.
However, Jain admitted that sales are down due to negative sentiments. "Prices are higher than budgets of prospective buyers and inflation and higher interest rates are also hurting buyers.," he said.
Jain added that Mumbai has large number of investor transactions which may not have been captured by unsold inventory data.
