Inventories of luxury apartments in Mumbai are piling up. At the last tally, real estate watchers had counted approximately 5,000 upmarket flats that are waiting for buyers.
FE couldn’t independently verify data for each of the constructions provided by industry players and the numbers, therefore, could be at some variance with the latest position.
However, given that each of these spacious apartments costs at least Rs 10 crore, the value of unsold apartments is estimated at close to Rs 50,000 crore.
Sales are tepid in central Mumbai — Lower Parel, Mahalaxmi, Prabhadevi and Parel. In these areas, the apartment sizes are typically between 4,000 sq ft and 7,000 sq ft accommodating three, four and five bedrooms. At the very least, they cost Rs 10 crore or approximately Rs 25,000 to Rs 30,000 per sq ft.
For ready-to-move in-projects, the cost is, understandably, somewhat steeper and in the range of Rs 65,000 a sq ft to Rs 80,000 a sq ft.
“Developers are now reducing the sizes of the apartments to make them more affordable,” Sandeep Runwal, director, Runwal Group, told FE. He added, however, that the group’s projects, coming up in south and central Mumbai, were doing well. “The Nepean Sea project has only 35 units, of which about 45% has been sold. The Worli project will have around 80 units,” he said.
The problem in central Mumbai is the oversupply of luxury projects; a back-of-the-envelope calculation shows that the micro-markets of Mahalaxmi, Lower Parel and Prabhadevi, all within 20 minutes’ driving distance of each other, have at least 13 projects coming up.
Top developers Lodha Developers, Oberoi Realty, Indiabulls, Hubtown, Sheth Developers, DB Realty, Lokhandwala Builders and Omkar Developers are all present here. A rough calculation by FE threw up unsold inventory in just six of these projects at over 1,000 apartments. Because unsold inventory is in advanced stages of construction, some of it commands a premium to the launch price. The value of unsold inventory in just these six projects could be in the range of Rs 16,000 crore to Rs 27,000 crore, if one assumes they’re between 4,000 sq ft and 7,000 sq ft, and fetch the current market price.
Omkar Developers’ project in Worli, 1973, is now 60% sold, according to consulting firm DTZ, on the back of a 20-80 scheme that gives buyers an option to pay 20% upfront and 80% on possession; DB Realty is also launching a similar scheme for DB Crown. “The option has seen some fence sitters start buying but there has to be ‘real’ demand,” said Ghulam Zia, executive director at Knight Frank India. Investors are a significant demand driver in this segment, with deeper pockets than end users, but according to Rohit Kumar, head of research at DTZ, they’re all waiting for a price correction. A recovery, however, is now expected only in nine months to a year.
[“source – financialexpress.com”]