Across the top seven cities in the country, real estate developers are sitting on unsold inventory worth ₹3,70,000 crore as on March-end, according to a study by JLL India.

An assessment of years to sell (YTS) reveals that the expected time to liquidate this stock has increased marginally from 3.2 years in the last quarter of 2019 to 3.3 years in the first quarter of 2020. With anticipated slower sales in the coming quarters, the time to sell is likely to increase.

“Thus, the duration to monetise the existing inventory of around 4,55,000 units is expected to extend. Resultantly, developers will have to sit on this unsold inventory worth ₹3,70,000 crore for a relatively longer duration. Having said this, the RBI’s intervention to provide a three-month moratorium on all term loans by financial institutions will alleviate short-term liquidity concerns and help developers survive in these uncertain times,” JLL India said in its quarterly report on the residential market.

The home-buyer community deferred purchase decisions due to the Covid-19 outbreak, which led to sales declining by nearly 30 per cent in Q1 2020 on a year-on-year basis.

“The impact of the ongoing pandemic on business activities became more prominent since the beginning of March 2020 in the country,” it said.

New launches

However, even though new project launches came to a standstill in March, the first quarter of this year witnessed a 3 per cent rise in new launches as compared to the same period last year. The first quarter of 2020 recorded new launches of 40,574 units compared to Q1 2019.

The healthy streak in launches in the beginning of the quarter was dampened by the growing concerns of the impact of Covid-19 on the real estate business starting in early March.

The market gradually slowed down in the beginning of March before it came to a standstill, on account of the nationwide lockdown, JLL said.

Mumbai and Bengaluru continued to dominate new launches and formed nearly 60 per cent of the overall launches during the quarter. The overall increase in new launches was driven by smaller markets like Pune, Kolkata and Chennai.

While new launches in Mumbai recorded a substantial 18 per cent fall, as compared to the same period last year, it remained largely unchanged in Bengaluru (rise of 3 per cent) and Delhi NCR (fall of 3 per cent), according to the report.

 

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