The total inventory lying with developers in the MMR (Mumbai Metropolitan Region) may touch Rs. 2.5 lakh crore as per studies with an extra 100, 000 unsold apartments in hand over the last year. Industry experts state that average prices of these apartments range between Rs.90-95 lakhs and hence there are fewer buyers currently. Additionally, prospective homebuyers are expecting a little drop in prices after RERA has been rolled out. The total apartments unsold at present may have crossed 2.5 lakh units and according to experts like the Managing Director at Liases Foras, Pankaj Kapoor, it may take close to 5 years to clear these unsold apartment stocks at the present pace.
Kapoor adds that the poor sales figures are due to the sky high property prices which have been spurred by an increase in overall input costs. While the apartments are not that big and range between 500-1,000 sq. ft. in terms of size, the weighted average price for every square foot has gone up to a steep Rs.13,000 as per data and reports. However, even as developer inventory for ready-to-move homes has gone up to 15, 000 units over the last two years, sales have also increased alongside and have doubled in this category to 10, 000 + units for 2016-17 which is higher than sales figures for 2015-16. The reason behind this is the urgency of most developers to finish construction and sell their properties prior to the RERA rollout.
With RERA now in place, there are chances of new launches and sales losing steam. According to the COO at Radius Developers, Ashish Shah, builders are now re-examining their business models for adhering to the new guidelines and as a result, the number of new launches may go down in recent times. According to him, the real estate companies should closely engage with all stakeholders and lenders in order to work out capital flows. He also added that credit lines may be required by developers for longer periods of time. Already, the paucity of cash after demonetization last year has led to a slowdown in terms of new launches considerably and the decline has been steady over the last four quarters. The top 8 cities, as per reports, have witnessed a 16% fall in new launches on a year-on-year basis with around 2, 800 new units launched for the period between January and March. From May onwards, project launches have reduced by a whopping 8% as per reports.
Experts feel that developers first need to change their operational and business blueprints along with their marketing mechanisms for adhering to the RERA regulations. Once developers are updated with compliance based models, sales volumes may pick up accordingly. Also, buyers will now be high on confidence with regard to getting their possession in a timely manner. Buyers may opt for more under-construction properties since these are more attractively priced. GST will also apply on ready-to-move homes along with the lower risk for buyers and this will spur demand according to Kapoor.
