NEW DELHI: Levels of unsold inventory in the residential and commercial real estate segments have risen to between 18% and 40% in different cities with the maximum unsold stock lying in the Delhi NCR over the last one year, according to a new study by industry body Assocham.
This is creating a big drag on several other sectors like financial services and steel, according to the study.
“In spite of a fall in prices and interest rates, the demand for residential market has witnessed a steep decline by 25-30% in the whereas the demand for commercial space dropped by 35-40% in the NCR region over the last year,” Assocham pointed out.
Mumbai which had been witnessing an increased activity around Navi Mumbai, Thane and other suburbs, is carrying the second largest unsold inventory, followed by Bengaluru and Chennai.
While Mumbai had unsold sold of 27.5%, for Bengaluru it was 25%, Chennai (22.5%), Ahmedabad (20%), Pune (19.5%) and Hyderabad (18%).
According to Assocham, NCR has an estimated unsold inventory of 250,000 housing units, which is approximately 35% of the units under construction due to delay in regulatory clearances and litigations.
“It is a difficult period both for the developers and the consumers who have booked flats. The regulators, developers, banks and consumers should form joint groups to work out the solutions,” DS Rawat, secretary general of Assocham said.
“The ticket price (of) three-bedroom, two-BHK and single room flats has seen correction by 35% in Noida, 30% in Gurgaon and 25% in some key areas of Delhi but still, the demand stays subdued,” the Assocham paper said.
This year the unsold inventory in residential real estate was the highest in Delhi-NCR at 250,000 units, followed by the Mumbai metropolitan region at 98,000. Bangalore came next with 66,000 units, Chennai with 60,000 units and Pune followed with 55,000 units.
The subdued construction activity has had a huge negative impact on the labour market since there are about 10 to 12 million workers engaged in the real estate sector. The slump in sales and launches clearly indicates that the residential market is facing a strong price resistance.
According to the report, many stakeholders including developers, financial institutions and other supply-side stakeholders believe that the current market scenario is worse compared to last year. Delayed reforms seem to have affected sentiment. Residential launches, sales, and price appreciation are at a much lower level than the last year.
The total number of new project launches in the National Capital Region (NCR) had come down by 30-35% in comparison to the last year. The unsold inventory is highest in Noida, with over 120,000 units while the remaining unsold inventory is in Delhi, Ghaziabad and Faridabad.
Credits ET Realty