Wednesday, 26 October 2016

Unsold stocks increase by 17%

The property market is going through a tough phase and as a result, the unsold apartments inventory has increased by 17% this year, says Liases Foras, Mumbai-based property research firm.

Liases Foras released its annual property research report on Monday. According to the annual property research report released by Liases Foras, in Mumbai and Delhi together, there are five lakh unsold houses.

"While in comparison to previous year, sales have increased this year by 9%. The sentiment is still muted across the eight tier I cities . Ahmedabad, Hyderabad and Kolkata showed improvement in sales, with growth more than 20%, while Pune, Chennai, and Bangalore witnessed decline in sales by 8%, 4% and 3%, respectively. Due to the prevailing uncertainty in the market, buyers chose to exercise caution for this quarter as well," said Pankaj Kapoor, managing director at Liases Foras.

Kapoor added that, this quarter witnessed a shift in preference of buyers towards units priced above Rs50 lacs. "All the eight major metro cities cumulatively sold highest number of units costing in the range of Rs50 lakh to Rs1 crore, with sales of 26.4mn sq.ft. (33%). Whereas, the affordable segment saw a decline in their market share from 10% in the previous quarter to 8% in first quarter of 2016-17. There was, however, a rise of 17% in unsold stocks across tier I cities. Although, on a quarterly basis, the growth in unsold stock was only 2%. The increase is attributable to existing stock as this quarter's new launches have dropped significantly," remarked Kapoor.

The survey further stated the the climb in weighted average price by 4% year over year (YoY) to Rs6,660 per sq.ft with major increase reported in Ahmedabad, Chennai and Hyderabad. While, weighted average price level in Mumbai metropolitan region was stagnant, annual decline of 3% to 4% was reported in Delhi and Pune.

While, new launches during the quarter dropped by 35% to 54.0 mn sqft, 34% and 33% of new launches were observed in the price brackets of Rs50 Lakh to Rs1 Cr and Rs25 Lakh to Rs50 Lakh, respectively.

Hyderabad saw maximum launches in the the luxury segment from Rs1 crore to Rs2 crore, as compared with Rs50 Lakh to Rs1 Cr cost bracket from last year. On the other hand, Pune saw most launches in the affordable segment (less than Rs25 lacs) as against Rs50 Lakh to Rs1 Cr cost bracket from last year.

This suggests that developers were now focusing on offloading the existing units rather than adding more supply, due to massive volume of unsold stocks. Also, it can be said that, due to uncertainty revolving around the applicability of Real Estate Regulatory Act (RERA), developers have adopted a wait-and-watch strategy," said Kapoor.

The housing industry observer said, besides the housing regulatory, the local corporation in mumbai was undergoing approval process of the proposed development plan (DP). "There are major changes in the reservations that will massively impact the housing sector. A large tract of no-development zones are going to open for residential and commercial development. Moreover, there will be addition and deletion of the imposed reservation. Therefore, developers had taken the stand to wait till the new DP is approved," said the observer.

Anand Gupta, president of the Builders Association of India (BAI) said it was true that the market is slow but sales were steady in affordable segments. "A lot of policy changes are being undertaken at the government front, so we move further when there is clarity on it, after which, umpteen projects will be undertaken," added Gupta. While, talking on the increase in unsold stocks, he said the number was high because under-construction units were also added while counting.