Before lamenting the space constraints in Mumbai metropolitan region, hear the analysts who will tell you that some 1.35 lakh homes here are lying unsold.
According to real estate research and ratings firm Liases Foras, the area of unsold properties on sale in the metropolitan market currently expands to 146 million sq ft. These properties are in various stages of construction: from ready possession to under construction to the newly launched.
Incidentally, the average real estate prices have gone up by five per cent in the last one year.
The report categorically mentions that based on the first quarter of 2013-14, of the total 155 million square foot of total residential area available for sale in MMR, a whopping 146 million sq ft remained unsold. Why? The metro’s famously unfriendly realty prices have proven to be unproductive for builders too.
According to Pankaj Kapoor, MD, Liases Foras, there’s a huge chunk of stock lying unsold in MMR because builders are holding back on prices. “The rates are unproductive for builders and unaffordable for the buyers. There are hardly any sales and it’s not even generating enough money for builders to pay the interest on the loans they borrowed.”
Behind the curtains, builders concur that units are not exactly selling like hot cakes but rather tying them down like dead weight. But no one is willing to get on record with the cold facts.
A top builder from South Mumbai said, “We have a lot of property lying with us, but these assets have turned dead assets and we have nothing to do but stay with them. Our sales are super low and we hardly see a buyer. There’s a need of correction, but no one wants to initiate it.”
He added, “The total unsold area of marketable residential space is 146 million sq ft, which would come to nearly 1.35 lakh units. This is among the worst in the last few quarters and years.”
Realtors in MMR managed to sell not more than 9.17 million sq ft in the first quarter this year, which was down from 10.45 million sq ft sold in the last quarter of the previous fiscal. The sales did not exceed 9.17 million sq ft in Q1, even though the fresh stock comprised 13 million sq ft of the total 155 million sq ft of residential space in the region.
With the need for course correction wrapped in whispers, even as sales are down by six per cent, realty prices in MMR have increased by five per cent on an yearly basis.
On quarterly basis, the sales have dropped by 12 per cent and prices have risen by 1 per cent.
Avg price rise per sq ft in first quarters of last 3 years:
Q1 2011-12 -- Rs 9,711
Q1 2012-13 -- Rs 11,178
Q1 2013-14 -- Rs 11,765
Total stock: 155 mn sq ft
Unsold stock: 146 mn sq ft
Fresh stock: 13 mn sq ft
>> On an annual basis: realty sales are down 6% this fiscal, but prices rose 5%
>> On quarterly basis: sales plunged 12% last quarter, but prices soared by 1%