A recent survey conducted across India's leading cities, encompassing Bangalore, Chennai, Mumbai, Delhi-NCR, Pune, and Hyderabad, has brought to light the challenges faced by the real estate sector due to copious amounts of unsold inventory. The accumulated unsold space throughout these cities amounts to a staggering 728.36 million square feet, with Delhi-NCR, Mumbai, and Bangalore holding the largest portions.
The Situation
The significant decline in sales has compelled developers to reduce prices for newly launched ventures. Some developers have also lowered the rates of existing developments. Newer projects are often priced lower than established projects throughout the nation.
The average launch price across the top cities is notably lower than current price benchmarks, with new launches being approximately 16-17% less expensive than existing projects offering similar amenities and residing in comparable locations.
Impact of Inventory
Rising inventory levels and slow sales are impacting development companies needing to re-evaluate pricing strategies for fresh initiatives.
Mumbai's unsold inventory reaches 162.43 million square feet. In the second quarter of 2013-14, sales totaled 8.23 million square feet, equating to Rs 8,123 crore. In contrast, 11.28 million square feet of new space was made available. During the same period last year, real estate transactions represented Rs 9,463 crore.
With decreasing sales and constant supply, Mumbai experiences a rapid rise in available but unsold space, currently estimated at 58 months' worth of inventory.
The study indicates that the majority of unsold space within the Mumbai Metropolitan Region, including areas stretching from Vasai in the western suburbs to Badlapur centrally, involves properties priced at Rs 2.8 Crore and above. This segment contains around 48 million square feet of unsold inventory, closely followed by 42 million square feet in the Rs 1.3 Crore to Rs 2.5 Crore range. The smallest unsold stock consists of properties valued below Rs 28 Lakh, totaling 12.1 million square feet.