As the economic slowdown persists, high interest rates on home loans squeeze borrowers while developers hold on to stocks, unsold apartments in Mumbai have reached dizzying levels with a possible pressure on prices ahead.According to a report by Knight Frank India, developers are sitting on 80,000 unsold units worth around R110,000 crore in the Mumbai metropolitan region (MMR).
“The Mumbai real estate market has stagnated in 2011-12 as buyers largely kept away from the market expecting an imminent drop in prices in the near future,” Knight Frank said its latest report Residential traction at glance.
The report also points out that five biggest developers are sitting on a debt of R6,200 crore.
The demand in the MMR has dipped due to non-correction in prices despite a significant fall in the demand, the report said.
In a recent real estate conclave held by the Confederation of Indian Industry (CII) in Mumbai, major developers said they would not slash prices. Buyers, already faced with high interest rates and slower growth in their incomes, are staying away from purchasing a house according to the report.
In 2011, while demand remained low, supply also dipped as the state government slowed down on giving approvals to developers. However, with approvals beginning to come in, the supply is likely to increase in 2012.
“Demand is likely to remain subdued due to prevailing uncertainty in the economy,” said Samantak Das, director, research and analytical services, Knight Frank India. “The increase in the inventory coupled with ongoing slack in absorption will put downward pressure on prices.”