With slow sales, flats worth Rs8,535cr are lying vacant in the city; inventory can pile up further, say experts.
There are so many residential flats lying unsold in Mumbai that it will take more than three years to clear the stock. This means the skyrocketing price of your dream house might ease up.
The value of the current unsold housing stock in Mumbai is around Rs8,535crore.
According to the quarterly report released by real estate research firm Liases Foras, there is 12.9 crore sqft inventory (housing projects launched, but not necessarily built) with 1.13 lakh housing units lying unsold in the Mumbai Metropolitan Region (MMR), which includes the city and its satellite towns. Around 6 crore sqft inventory with 35,000 housing units is lying unsold within the city limits, the report added.
The size of each flat in the MMR is 1,100 sqft, while that in the city limits is 1,600 sqft.
“It will take at least 40 months to sell this unsold stock in Mumbai, and that too if there are no new projects. But launches are happening frequently. This means the inventory will pile up further,” said Pankaj Kapoor, managing director of Liases Foras.
“In a healthy market, the inventory should be cleared within eight months. But the number of unsold flats in the city is rising every year. The housing stock is not drying up as it was projected in one-and-a-half year back,” he added.
In 2010-11, 2.66 crore sqft residential stock was lying unsold within the city limits, and 8.17 crore sqft in the MMR. Still, developers launched more than 100 housing projects in the city last year.
But the realty scene is not so grim in other cities.
Last year, while only 96 lakh sqft residential space was sold in city —at 3% — Pune registered 28% sales and Chennai 37% sales.
“Pune is selling more residential flats compared with Mumbai. It’s real estate is an end-user driven market, which is a healthy and good sign,” said Kapoor, adding that the realty market in Mumbai is unproductive.
“It is not beneficial to anyone except investors. Developers will face severe fund crunch; banks will be reluctant to offer loans and people will not afford to buy their dream house,” he added.
Anand Gupta, treasurer of the Builder Association of India, said there is huge gap between the demand and supply.
“There are many people who cannot afford to buy their dream home. And, then there are investors who buy more than one flat because they get good appreciation. Because of faulty law, they do not give the flats on rent and hence, the unsold inventory percentage is so high,” he said.
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