More than half the residential apartments already built or under construction in key markets across India remain unsold, according to a report by a Mumbai based real estate research agency Liases Foras.
This is due to high realty prices which forced buyers to stay away from the market over the last two years. According to the report, 53 per cent of all flats in fully constructed buildings or under construction stage are vacant due the absence of buyers — 20 per cent of them are fully built and waiting for buyers.
This high inventory of flats has now forced developers to offer heavy discounts.
“Our survey found that there is an inventory of 60-70 months,” said Pankaj Kapoor, CEO, Liases Foras. “Buyers will come if residential apartment prices drop by 40-45 per cent from their peaks. Prices have already dropped by 25-30 per cent due to liquidity crunch faced by developers. One can expect further correction of 5 to 10 per cent.”
The firm conducted a survey of all projects just completed or to be completed by end of 2010 in six cities including NCR, Delhi and Mumbai Metropolitan region and found that 4.35 lakh out of 8.21 lakh houses have not been sold.
In the Mumbai region more than 8 crore sq ft area is unsold. Similarly, there is an inventory of more than 15 crore sq ft in the NCR (60 per cent in Ghaziabad, 20 per cent in Gurgaon and the rest in Noida and Faridabad).
In the Mumbai region most of the unsold property is in Navi Mumbai, Thane, extended suburbs of Kalyan-Dombivali and Mira-Bahayander, said Kapoor. He said 50 crore sq ft of residential space out of 94.5 crore is lying vacant in six cities, the least being in Chennai.
“There is no doubt that prices have corrected by 10-35 per cent and this has created a demand,” said Niranjan Hiranandani, managing director, Hiranandani Construction, a developer of premium houses. “Most newly launched projects are getting sold out and we are expecting the recovery faster than expected.”