Listed companies have cobbled up inventory worth Rs1 lakh crore, suppressing new housing starts and softening prices, media reports say.
Real estate developers have continued to add inventory despite a slowdownin the off-take of new properties as liquidity has drained out of the market, according to industry observers.
The top 27 listed realty companies had unsold inventory to the tune of Rs 1.13 lakh by the end of the September quarter, up 21 per cent from Rs 93,358 crore by the March quarter end. The inventory, observers say, was equivalent to 32 months of the industry's annualised net sales in the first half of FY19, up from 25.2 months' worth of inventory by the end of March 2018. The market held 22.7 months' worth of inventory at the end of March 2016, sales data show.
However, the ready availability of ready-to-move-in units and a general softnessin price are expected to improve the off-take of the units in the medium term, according to market experts. Data analytics firm PropEquity says that sales are to rise by 7 per cent during 2018 to nearly 2.15 lakh units in nine major cities.
The pending inventory suppressed new launches by 22 per cent to 1.46 lakh units during 2018 against 1.87 lakh units in the previous year.
The nine cities tracked by PropEquity are Gurugram, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru, Thane and Chennai.
"In 2018, we witnessed over 20 per cent fall in new launches in top nine Indian citiesas developers across cities focused on executing and aggressively selling previously launched projects. This also led to unsold inventory falling by over 10 per cent; and effectively these top nine cities sold 7.2 per cent more units in 2018 versus 2017 even with fewer launched projects," Samir Jasuja, Founder and MD, PropEquity, told Business Standard website.
This year is going to be a watershed year for the real estate sector based on the solid demand for ready-to-move and nearing completion projects, Jasuja says.