Agony of Unsold Inventories
Delhi National capital Region
While Mumbai has unsold inventory of approximately 27.5%, Bengaluru - 25%, Chennai - 22.5%, Ahmedabad - 20%, Pune - 19.5% and Hyderabad - 18%, the maximum unsold stock is lying in the Delhi NCR region, approximately 35%. The unsold inventory is highest in Noida, while the remaining unsold inventory is in Delhi, Ghaziabad and Faridabad.
The rising pile of unsold residential and commercial properties in different cities with the maximum in the North India has been dragging down the allied sectors like financial services and building materials as well. The submissive construction activity has had a negative impact on the labour market too which engages almost 10 to 12 million workers.
As per ASSOCHAM, "In spite of a fall in prices and interest rates, the demand for residential market has witnessed a steep decline by 25-30% , whereas the demand for commercial space dropped by 35-40% in the NCR region over the last year."
As a matter of fact, the slew of infrastructure projects and recent government policy announcements are yet to create any significant mark on Delhi NCR's property landscape. The prices continue to be high and many projects are facing litigation and clearance issues. What’s more, builder floors are more popular with home buyers in this region than society apartments, according to some reports.
However, property experts believe that the factors such as expansion of the metro project, RBI repo rate cut, government focus on affordable housing projects, and rise in office space absorption will bring good news for the North India real estate market.
Rahul Trivedi gives an overview of the North Indian real estate, its challenges & opportunities and speaks to various realty stakeholders of the region.
Many contemplate what went wrong with the North India realty market which has almost come to a standstill in the face of the massive unsold inventory. Indeed, iIt might take a few years for it to recover, but the market is already on the road to revival.
While talking about the real estate market, North Indian market was believed to be the one of the most stable markets across the country. The real estate sector in North India became more prominent due to the massive development in the Delhi and adjoining region which is National Capital Region (NCR). The prominence which real estate sector gained was not only because of the proximity to the country’s capital but also because the region had huge land banks which had enormous potential of development.
The market in the early 2000 was the target of almost all the developers. The Delhi-NCR market was so much in demand that developers acquired huge chunks of land and paid hefty amount against that to the farmers. Seeing the amount, most of the farmers started buying land at cheaper rates from others and sold it to builders at higher prices. For a period of time, this became a business model for few in the NCR region. Currently, there are many people who build a three storey house and sell it by the name of ‘builder floors’. The real estate sector has helped many families, who were not able to earn livelihood through farming, in making quick and huge money from the idea of development.
During the initial phase, the market saw a huge boom and developers were able to make good money from the business, but gradually things changed and the market began to slowdown. Though, there were many reasons behind this slowdown but a major reason was the invasion of investors in the market. Due to this, the prices inflated to the all time high and the market was not in the reach of end-users. As the end-users were not in the market, the number of unsold inventories started increasing. Since, the developers were not able to sell the inventories they began to feel the lack of funds and the timely delivery became a farfetched idea.
Tags : Story