MUMBAI: More than half of Mumbai’s luxury apartments, both developed and under construction, remain unsold, signifying a sharp shift in the segment that has traditionally been insulated from the vagaries of economic cycles.
Of the 3,300 luxury apartments being developed in Mumbai – and priced between Rs 10 crore and Rs 100 crore – about 55-60 % are yet to be sold, as regulatory uncertainty, surging prices and supply glut prompt the super-rich to put their home buys on hold. About 1,880 units in this price range came up in the last one year alone.
According to industry sources, some of the projects that have significant unsold inventory include Shapoorji Pallonji-Dilip Thacker’s The Imperial at Tardeo in south Mumbai, where over 40 of the total 228 flats are yet to be sold even though the project was completed in 2010; DB Realty’s Orchid Crown at Prabhadevi, where nearly 35% of the 612-apartment inventory is yet to be sold; and Lodha Group’s World One at Lower Parel, where over 40% of the 170 flats launched so far are unsold.
“Slowdown is clearly visible from the lower velocity with which the apartments are being picked up,” says Pankaj Kapoor, managing director, Liases Foras Real Estate Rating & Research.
The Mumbai market saw about 100 luxury apartments sold in fiscal 2011-12 compared with about 400 sold in 2007-08 , the peak year for the property market. The initial signs of oversupply were seen after June 2009 as most developers in Mumbai start ed launching apartments that were targeted at the ultra-high net worth individuals.
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Around 70% of the current estimated supply in the luxury segment has come after June 2009. The launches were prompted by developers’ confidence in economic growth estimates , upward mobility in income levels and reports of more number of millionaires being created in India. “That is where the glut started getting created,” says Kapoor.
“There’s no doubt that sales in this segment are going slow. Developers are also, therefore, going slow with the construction of these projects. Some developers who have ready apartments are waiting for a better price, but this is more in hope than anything else,” said Pranay Vakil, chairman, Knight Frank India.
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