Mumbai's real estate sector is going through one of its worst phases. This year, it recorded the lowest number of new launches since the realty slowdown began in 2008, according to a new report.
A report by real estate consultancy firm Knight Frank India found the number of new launches in the Mumbai Metropolitan Region (MMR) during January-June this year declined by 47% — 18,887 units compared to the 35,512 units launched in the corresponding period last year. The number of sales also saw a decrease — 28,447 units were sold during January-June 2015 compared to 31,210 units last year.
The MMR consists of Mumbai, Navi Mumbai, Thane and Raigad region.
According to Samantak Das, chief economist and national director-research, Knight Frank India, various factors have led the realty sector to stagnate. “Builders are facing shrinkage in funds and are saddled with a huge pile of unsold inventory. The confusion in the DP (Development Plan) has added to the crisis,” said Das.
The findings also point out that more than two lakh houses remain unsold in the MMR. “It will take at least three years to clear this stock,” said Shishir Baijal, chairman and managing director, Knight Frank. He said the next few months will be crucial. “There will be turmoil if things do not improve in the coming months,” he said.
Unaffordability also still influences the market, he said. “Buyers still feel that the prices are unaffordable.”
Other reasons outlined are the buyers still lack confidence in the economic condition and also the ability of the builders to give possession of the apartments on time.
The Maharashtra Chambers of Housing Industry (MCHI), the apex body for builders, however, disputed the findings. “There are steady sales taking place across the board and sentiments have improved this year,” said Dharmesh Jain, president, MCHI. “Builders are not launching new projects because of issues such as permissions and many are waiting for the DP to come. It has nothing to do with their ability to launch the projects,” he said.
The real estate sector has is in slowdown mode ever since the global financial crisis hit in the year 2008-09. Builders increased prices to exorbitant levels causing many homebuyers to postpone their purchase plans. In addition, the Reserve Bank of India tightened lending norms and hiked home loan interests causing a huge burden to the buyers.
* Residential market under pressure because the number of launches declined considerably in the MMR in the first half of 2015.
* Even sales have dropped despite various schemes and freebies launched by the builders
* The number of unsold inventory in MMR is approximately 2 lakh units and will take at least three years to clear it at the current pace