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53% Built Homes Remain Unsold in Metros

Comments Off on 53% Built Homes Remain Unsold in Metros   |   March 18, 2009    11:33am   |Contributed by Indian Realty News

More than half the houses built in six major cities over the last two years are lying unsold, estimates a leading real estate research agency. Just about 3.86 lakh homes out of the 8.21 lakh built in the last two years in the Mumbai Metropolitan Region (Mumbai, Thane and Navi Mumbai), National Capital Region (Delhi, Faridabad, Gurgaon, Noida, Greater Noida and Ghaziabad ), Bangalore, Chennai, Hyderabad and Pune found buyers, says a report by the Mumbai-based Liases Foras. The agency surveyed 5,810 new residential projects in these cities in December and January. The 53 per cent unsold inventory (4.35 lakh homes) translates into no takers for 50 crore sq ft of a total 94 crore sq ft of living space. Pankaj Kapoor, CEO of Liases Foras, said the inventory of unsold houses across cities has doubled over the past year. In Mumbai, it has increased nearly five times between 2006 and 2009 — from 1.68 lakh sq ft to 8.08 lakh sq ft.

Kapoor attributed the absence of buyers to the mismatch between prices and affordibility. According to the report, prices started to go up in 2006, when supply was limited. Over the next two years, they shot through the roof as money poured into real estate firms from IPOs, FDI and cash-laden investors. Stocks piled up as developers shifted focus from selling homes to getting financial valuations done to attract more investment. This, Kapoor said, is evident from the fact that Chennai, which has a conservative realty market with little involvement of equity players, has only 42 per cent unsold flats ¿ less than Mumbai and Delhi and the IT hubs of Bangalore, Pune and Hyderabad, where over 50 per cent of the stock remains unsold.

The supply glut, and the fact that investors and private equity firms are largely out of the realty market, signals good times for buyers, the report says. Firms like DLF have announced price cuts ranging from 18 per cent (Chennai) to 30 per cent (Bangalore). “Battling mounting debts, developers are left with little option but to find end-users to sell their flats. The gap between affordability and pricing is narrowing,” Kapoor said.

News Published Under:   Mumbai, Real Estate India | Comments Off on 53% Built Homes Remain Unsold in Metros