The residential market in the National Capital Region (NCR) is stuck with an estimated unsold inventory of 1.7 lakh units, while another 90,000 under-construction dwelling units are likely to be delayed for handover, a recent survey conducted by the Associated Chambers of Commerce and Industry of India (Assocham) has revealed.
A random survey of nearly 120 real estate developers in Delhi-NCR revealed that the demand for “buying new property” has decreased by over 30 per cent to 35 per cent over the past one year. The NCR, including Ghaziabad, Noida, Greater Noida, Faridabad, Gurgaon, Sohna, Bhiwadi and Kundli, has witnessed a large number residential projects coming up in the past few years.
According to the survey, a large inventory is piling up despite price correction by over 20 per cent in the past year, while there is a huge fall in new projects being launched by developers who are hard-pressed for money. The increase in inventory level, the survey has revealed, is due to the fall in demand from actual users as well as investors. Even ready-to-move flats are finding few buyers, reveals the majority of the respondents.
The ticket price of three-bedroom, two-bedroom and single bedroom flats has seen correction by 30 per cent in Noida, 25 per cent in Gurgaon and 15 per cent in some key areas of Delhi, but demand continues to remain subdued, adds the survey
“The sentiment in the housing market is really at a low key. Even though there are signs of macro-economic improvement, it will be a quite a lag before it gets reflected on real estate markets,” said Assocham secretary-general D. S. Rawat. According to him, one of the issues afflicting the sentiment is the high level of debt with real estate developers and their poor valuations in the stock markets, limiting their avenues for repair of balance sheets.
“Somehow, it reflects on timely delivery of projects, coupled with problems created by high interest costs despite some course correction by the Reserve Bank of India,” the study pointed out.
According to the survey, the unsold inventory pressure in the NCR region is the highest among all other cities.
The majority of real estate developers in NCR regions said about 60 per cent of the unsold real estate in the NCR is in areas that are currently uninhabitable. The problem has been compounded by delays in regulatory clearances and litigation, points out the survey.