Luxury Housing Still in ICU

BY Realty Plus

Snapped up like hot cakes by investors in previous years, luxury housing sales are still in the doldrums and hinging largely on end-user sales. Even after three years of demonetization, despite having the lowest share of overall unsold stock in the top 7 cities, it remains the worst-performing of all budget categories. Unsold luxury stock had increased by 10% y-o-y in the top 7 cities by 2019-end, reveals ANAROCK data. There were 89,200 units of unsold luxury stock (homes priced >INR 1.5 Crore) by 2019-end as against 81,290 units in 2018. Overall value of unsold luxury stock as on 2019 is estimated to be nearly INR 1.59 lakh crore, which is 34% of total unsold stock value. "Overall unsold housing stock across different budget segments stood at 6.48 lakh units worth INR 4.64 lakh crore in top 7 cities by 2019-end, declining by mere 4% since 2018. On breaking down the unsold stock at the two extreme ends of the budget spectrum, it emerges that affordable homes comprised the maximum share at 36% while luxury homes had the least, with less than 14% share. Luxury developers have severely curtailed the supply pipeline, primarily due to the absence of investors in this segment." Anuj Puri, Chairman - ANAROCK Property Consultants.

Mid-segment homes priced between INR 40-80 lakh shed the maximum unsold stock in 2019 by 15% - from nearly 2.27 lakh units in 2018 to approx. 2.02 lakh units in 2019-end.

Except Kolkata, all cities saw their unsold luxury stock increase in 2019:

• Kolkata - in sharp contrast to other cities - saw a 10% decline in its unsold luxury stock, from 2,265 units as on 2018-end to approx. 2,050 units by 2019.
• MMR did reasonably well - despite adding almost 11,250 luxury units in 2019, the region saw a mere 2% y-o-y increase in unsold luxury stock – from 48,040 units in 2018 to 48,970 units by 2019-end.
• Hyderabad and Pune saw unsold luxury stock increase by a whopping 58% and 56% respectively during the period. Hyderabad's pent-up luxury stock rose from 3,000 units in 2018 to nearly 4,740 units in 2019; in Pune, it increased from 2,750 units in 2018 to 4,290 units in 2019.
• In Chennai, unsold luxury stock increased by 33% in a year – from 2,480 units in 2018 to nearly 3,300 units by 2019-end.
• NCR saw its unsold luxury stock increase by 17% in the period. The unsold luxury stock here was the second-highest after MMR with around 18,400 units by 2019-end.
• Bangalore’s unsold luxury stock also increased by 6% - from 7,010 units in 2018 to 7,470 units by 2019-end.

Unsold Housing Stock: Budget-wise Performance

Of the total current unsold stock of nearly 6,48,400 units in the top 7 cities, affordable housing (priced <INR 40 lakh) comprised the maximum share at about 36%, followed by 31% in the mid-segment (INR 40-80 lakh). The share of unsold premium homes priced between INR 80 lakh and INR 1.5 Cr was 19%, while luxury accounted for 14%.

• Mid-segment homes shed over 15% unsold stock during the year – from 2,36,600 units in 2018-end to approx. 2,01,670 units by 2019-end. Bangalore and Hyderabad saw the maximum yearly stock decline of 37% and 34% respectively.
• Affordable housing, with the highest new supply in 2019, affordable homes saw unsold stock reduce by a marginal 1% - from 2,38,750 units in 2018 to 2,36,640 units by 2019-end. Hyderabad, Kolkata, Chennai and NCR shed maximum unsold affordable stock - by 28%, 11%, 10% and 9% respectively.
• Unsold stock of premium homes priced from INR 80 lakh to INR 1.5 Cr increased by 4% to 1,20,900 units as on 2019-end.

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