Real Estate

Home inventory drops to 10-quarter low as sales improve

Anil Urs Bengaluru | Updated on January 09, 2018

Home run An overwhelming 85 per cent of under-construction real estate projects is in the residential class alone. - M PERIASAMY

Developers go slow on new launches

The second quarter of 2017 marked a record low for residential units launched across India, even as sales continue to outdo new units coming up, Anuj Puri, Chairman of Anarock Property Consultants, has said.

“Over 20,000 new units were launched across India’s top seven cities in 2Q17, while the number was slightly higher at over 26,000 units in 1Q17,” he added.

The trend is expected to continue as the industry gears for further consolidation as more clarity on RERA implementation emerges across States, he said.

Unsold inventory

A corresponding fall in inventory was also recorded with the number of unsold residential units falling to around 4.2 lakh after 30 months. The last time India’s inventory overhang was close to this figure was in the fourth quarter of 2014, when it was slightly above 4 lakh.

“Inventory levels are expected to come down further as developers rush to register projects under RERA in States that have implemented it. Developers operating in States which have not yet finalised their RERA rules continue to await further clarity,” Puri said.

Cash flows dwindle

Remarkably, though, residential real estate continues to dominate the share of under-construction projects across India’s top seven cities — Mumbai, Bengaluru, Delhi-NCR, Hyderabad, Pune, Chennai and Kolkata.

“Across these seven realty markets, the value of under-construction projects in all three asset classes — residential, office and retail — is currently pegged at $236 billion. An overwhelming 85 per cent of this under-construction real estate is in the residential class alone,” Puri said. According to Puri, with the traditional cash flows previously seen in a residential project’s lifecycle not working out under the current policy framework, developers have now changed their business models altogether. As a result of the changing market dynamics and business models, developers have been going slow on new project launches, he added.

Published on August 22, 2017

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