Inventory of under-construction properties in major Indian cities has dropped the most in the past seven years as new housing projects have lately trailed sales, the Economic Times mentioned citing an Axis Capital report.
The study suggests that Pune has emerged as the best market in India in volume terms, followed by Hyderabad while Mumbai has seen the largest inventory decline. “The credit crisis that began in FY18-19 accelerated the pace of consolidation and benefitted grade-A developers more. As unsold inventory at under-construction projects decline, we expect developers to step up launches again from FY23,” the financial daily quoted the Axis Capital report as saying.
Pune has emerged as the largest market with the lowest inventory levels (age of unsold inventory) while MMR’s (especially Mumbai) inventory months have reduced by nearly a half.
In Pune, the age of unsold inventory is close to 15 months, which means all housing units launched before that have been sold. In Mumbai, the inventory months have reduced from 40 to a little over 20 in the last 5-6 years. NCR continues to lag on both the parameters.
“The onset of RERA, post 2018, initiated the process of consolidation in the sector, leading to buyers being more aware and confident of the projects. The last few years also saw muted demand, leading to a fall in the number of new project launches across the markets,” the business daily quoted Sumeet Abrol, Partner- Lead Advisory, Grant Thornton Bharat as saying.
Developers also focused on selling under-construction properties instead of fresh housing starts. “We focused on selling our under-construction projects; this segment moved very fast for us. Our focus remained on timely delivery of the projects to our customers,” said Pankaj Bansal, Director, M3M.
Inventory levels, especially in markets such as Mumbai, Pune and Thane, are at a decadal low.
Bengaluru still remains at above two years of inventory but primary sales have dropped consistently. Experts say that the rise of Hyderabad as a major property hub has had an impact on Bengaluru sales.
“Fortunately, the last 6-8 months have seen renewed demand in the sector and developers are trying to optimise the opportunity by launching projects with attractive specs and utilities. The acceleration in demand for independent and bigger residential spaces, due to the pandemic, has created an opportunity for developers to sell inventory of completed and near completion projects,” said Abrol.
The Axis capital report expects grade-A developers to gain further market share, as buyers would continue to prefer them to other developers despite some price premium.
