Realty Inventory Falling Across Tier-1 Cities

Unsold inventory of residential real estate projects is declining across tier-1 Indian cities. In a report published on 24 February, Emkay Global Financial Services Ltd said unsold inventory

BY Realty Plus
Published - Saturday, 27 Feb, 2021

Realty Inventory Falling Across Tier-1 Cities

Unsold inventory of residential real estate projects is declining across tier-1 Indian cities. In a report published on 24 February, Emkay Global Financial Services Ltd said unsold inventory (in units), was down 10% year-on-year basis at 34 months in January 2021. City-wise, unsold inventory in Mumbai Metropolitan Region (MMR) was down 14% y-o-y at 31 months in January. In the National Capital Region, unsold inventory fell 9% y-o-y at 89 months in January on account of lower launches in the past few months. Bengaluru witnessed a 6% y-o-y drop in unsold inventory, which was the biggest decline in 14 months, said the Emkay report. On the other hand, Hyderabad witnessed a 9% y-o-y growth in unsold inventory. The Emkay report also highlighted that new launches of residential projects continued to decline across tier-1 cities and absorption fell too. "For tier 1 Indian cities, new launches continued to decline in January 2021 (down 66% y-o-y), while absorptions fell 3% y-o-y after strong 65% growth in December 2020. The decline was primarily a result of the tapering effect seen in Maharashtra (MMR and Pune), which had benefited from a lower stamp duty rate in Dec’20," said the report. According to real estate analysts, while the decline in unsold inventory is positive, it is not sufficient to translate into higher prices immediately, given the large supply. At a recently held Confederation of Indian Industries (CII) real estate conference, sector experts said that although sales volume growth was strong in the past few months, the growth in sales was limited to very select developers with most other developers facing a severe cash crunch due to lack of sales. Experts were of the view that price rise is likely to happen after stabilization of sales and reduction of inventory in the market. The lag could be from six months to two years, said experts