The situation represents a dramatic turnaround from 2010, up until which year many developers, spurred on by rising demand among investors and end-users, were focussed on luxury projects in picturesque locations and amidst stretches of greenery.
Today, however, at least eight major cities are sitting on an inventory of luxury homes that, in the absence of buyers, will take about four years to clear.
The supply of luxury houses surged in 2009-10 when high-rise towers were being launched in Mumbai, NCR (led by Gurgaon), Bengaluru, Hyderabad, Pune and other major cities. “A lot of money was available in the market and investors were active participants,” he says.
However, the economic slowdown caused bonuses to dry up, leaving many investors scrambling to exit.
“Post 2010, investors were looking to exit and the market needed end-users to take their place. But end-users found the big houses beyond their budget. That situation has continued, leading to a pile-up of inventory,” says Kapoor.
Sanjay Sharma, Managing Director of Gurgaon-based real estate consultancy and brokerage firm QuBrex, quantifies the slump. “In good times, we brokered about 25 transactions in the luxury space every month. Today, we’re lucky if we can close even one deal a month,” he says.
“Sales in the luxury segment are uncomfortably low. If too many projects come up at the same time and they are all going after the same clientele, it is bound to impact demand,” says Ashutosh Limaye, Research Head for JLL India.
Credits The Hindu Business Line