An estimated 100,00 apartments have remained unsold over the past year in the Mumbai Metropolitan Region (MMR), taking the total unsold inventory in the city to over Rs 2.5 lakh crore.
According to a Financial Express report, most of the unsold flats fall in the Rs 90 to 95 lakh price bracket, which typically sees high demand.
One of the main reasons for the unsold inventory is the anticipation of a price drop in the wake of Real Estate (Regulation and Development) Act or RERA roll out.
The total cost of the aggregated inventory has crossed Rs 2.5 lakh crore and developers could take up to five years to get them off their books. “At the current pace, it could take nearly five years to clear the unsold stock,” Pankaj Kapoor, MD, Liases Foras told the daily.
Data from Liases Foras also showed that while most flats were between 500 to 1,000 square feet in size, their average price per square foot was as high as Rs 13,000.
Incidentally, builders cleared a lot more inventory ahead of the RERA roll out. According to statistics, around 8,200 more properties were sold in FY17 (55,315) than FY16 (47,119).
Earlier, buyers were often tempted at purchasing flats in ready-to-occupy properties due to the uncertainty over project completion.
But, with RERA expected to cut down on delays by bringing in more accountability, buyers are more inclined towards the more reasonably priced under-construction projects.
The act, aimed at protecting the buyer’s interest, requires developers to register all commercial and residential projects above 500 square meters with the regulator and comply with the RERA norms, which include levying penalties for delaying projects.
Although developers are required to make changes to their business operations and marketing strategies to comply with RERA norms, sales could pick up once the compliance is in place and buyers are confident of getting possession on time.