No takers for 1.3 lakh flats in Mumbai, says report
RELATED
MUMBAI: The city's residential market is in dire straits with 1.30 lakh
unsold flats, while another 2.90 lakh homes are under construction,
reveals a report.
A Knight Frank India Mumbai realty market research report released on Tuesday said the unsold inventory level in the Mumbai metropolitan region is almost 44%. Around 47,488 apartments were launched between January and September, a considerable 28% drop compared to last year.
Due to the weakening demand, the residential market will require over two years to exhaust the existing unsold inventory, the report stated. Shishir Baijal, chairman and managing director of Knight Frank said the rise in interest cost and decline in net profits during 2013 will compel developers to lighten inventory load and deleverage their balance sheets.
"Demand however, is likely to remain subdued over the initial part of 2014 as the market continues to bottom out against the backdrop of a sluggish economy," he added. The launch of new residential projects plummeted over 40% compared to peak levels in 2010. Approximately 47,488 units were launched during the January-September 2013 period; a considerable 28% drop compared to last year.
Interestingly, 34% of the projects were launched in Ambernath, Bhiwandi, Mumbra and Karjat. About 19% projects commenced in the Virar-Palghar stretch, 18% in Navi Mumbai, 10% in Bandra, Andheri, Goregaon, and a measly one per cent in south Mumbai. "The Navi Mumbai story lost some momentum as its share of units launched dropped 18% in 2013 from 22% last year. Inordinate delays in the execution of major infrastructure projects such as the new airport and Trans-Harbour link coupled with comparatively dearer inventory have caused a lull in market activity," the report mentioned. It predicts that a price correction is on the anvil as there are no takers for premium projects. "Developers are looking to tap into the largest chunk of buyers seeking apartments priced up to Rs 75 lakh. An estimated 74% of units under construction today are targeted at this price,'' it said.
"In a bid to liquidate their higher priced inventory, developers have been open to in the premium segment, to reduce prices up to a maximum of 25% in favour of a sizeable up-front payment," said the report. For instance, prices in some south and central Mumbai locations like Parel and Mahalaxmi have declined close to 10% over the previous three quarters. "Unsold inventory pressure in Mumbai is the highest among all other cities and is depicting a growing trend. We expect a more pronounced price correction which may drive the market to a better equilibrium," said Samantak Das, chief economist, director- research and advisory services, Knight Frank India.
A Knight Frank India Mumbai realty market research report released on Tuesday said the unsold inventory level in the Mumbai metropolitan region is almost 44%. Around 47,488 apartments were launched between January and September, a considerable 28% drop compared to last year.
Due to the weakening demand, the residential market will require over two years to exhaust the existing unsold inventory, the report stated. Shishir Baijal, chairman and managing director of Knight Frank said the rise in interest cost and decline in net profits during 2013 will compel developers to lighten inventory load and deleverage their balance sheets.
"Demand however, is likely to remain subdued over the initial part of 2014 as the market continues to bottom out against the backdrop of a sluggish economy," he added. The launch of new residential projects plummeted over 40% compared to peak levels in 2010. Approximately 47,488 units were launched during the January-September 2013 period; a considerable 28% drop compared to last year.
Interestingly, 34% of the projects were launched in Ambernath, Bhiwandi, Mumbra and Karjat. About 19% projects commenced in the Virar-Palghar stretch, 18% in Navi Mumbai, 10% in Bandra, Andheri, Goregaon, and a measly one per cent in south Mumbai. "The Navi Mumbai story lost some momentum as its share of units launched dropped 18% in 2013 from 22% last year. Inordinate delays in the execution of major infrastructure projects such as the new airport and Trans-Harbour link coupled with comparatively dearer inventory have caused a lull in market activity," the report mentioned. It predicts that a price correction is on the anvil as there are no takers for premium projects. "Developers are looking to tap into the largest chunk of buyers seeking apartments priced up to Rs 75 lakh. An estimated 74% of units under construction today are targeted at this price,'' it said.
"In a bid to liquidate their higher priced inventory, developers have been open to in the premium segment, to reduce prices up to a maximum of 25% in favour of a sizeable up-front payment," said the report. For instance, prices in some south and central Mumbai locations like Parel and Mahalaxmi have declined close to 10% over the previous three quarters. "Unsold inventory pressure in Mumbai is the highest among all other cities and is depicting a growing trend. We expect a more pronounced price correction which may drive the market to a better equilibrium," said Samantak Das, chief economist, director- research and advisory services, Knight Frank India.
