Unsold inventory may force realtors to cut prices in NCR
Sep 08, 2015
Source : Toi

 

NEW DELHI: A slump in home sales has pushed builders' inventory to 'unsustainable levels' in the National Capital Region of Delhi, creating conditions for a real price correction that developers have so far avoided, experts say.

Builders in the NCR had 175,000 unsold apartments in the three months to June, according to data from property consultancy JLL India. Most of these apartments though are under construction. While sales have been on a slide in most of the big cities, the problem in the NCR is peculiar. A mix of high prices and large sizes has pushed most of the on-sale apartments beyond the reach of average home buyers.

What has further compounded the problem is the fact that many of these apartments are located in far away areas that do not have much to boast in terms of infrastructure.

 "Unless prices come down, sales are likely to remain low in the NCR," said Rubi Arya, executive vice-chairman and director at private equity firm Milestone Capital Advisors. The NCR, she said, is now selling fewer homes in terms of volume than even a smaller market like Bengaluru. "Unless this unsold stock gets absorbed, it will be difficult for consumer confidence to come back in this market," she added.

 This has stretched the balance sheets of builders across the NCR, hampering their ability to reduce debt or launch new projects. Ashutosh Limaye, national director, research, at JLL India, said builders will come under further pressure because of this unsold inventory.
"In the secondary market, investors who had picked up properties earlier are becoming restless as they don't see much appreciation in prices. They want to exit. When this supply comes in to the market at a discount, it will create further pressure on developers, especially for small and mid-sized builders," said Limaye.

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