UNREAL ESTATE Unsold units in Mumbai touch 122 million sq ft

Mumbai: With fewer buyers showing interest in purchasing property, the number of unsold units in the Mumbai metropolitan region has skyrocketed. 

    Unsold units touched 121.97 million sq ft by June 2012 from 110 million sq ft in December 2011, according to Liases Foras real estate rating and research firm. Of 121 million sq ft, the highest number of unsold units, about 25%, are located in the western suburbs from Bandra to Borivli and also in the areas beyond Thane in the central suburbs. 
    Unsold stock comprises roughly 10% of ready flats, while the balance comprises under-construction and newly-launched projects. 
    "Going by the existing absorption rate (sales), it will take approximately 37 months to clear the current stock of unsold units," said Pankaj Kapoor, founder of Liases Foras. 
    As per the company's data, sales have climbed from eight million sq ft between April and June 2011 to almost 9.79 million sq ft between April and June 2012. The value of homes sold in the Mumbai metropolitan region correspondingly increased from an average Rs 10,559 per sq ft to Rs 11,154 per sq ft. 
    "Although sales in the metropolitan region have improved in terms of the number of units, figures suggest that cheaper properties available in the extended suburbs of the city were major contributors of this improvement," Kapoor said. 
    Expressing a similar view, research firm Prabhudas Lilladher said that while a slight increase of about 6% was noticed in sales registrations in the past few months in Mumbai, one could hardly term this "arrest" in sales as a recovery in the real estate sector. "The incremental demand could be on account of first-time home buyers taking the plunge in the absence of price correction and from NRI-led demand due to significant weakening of the rupee," analysts said. 
    "With interest rates remaining firm, the woes of the real estate industry are likely to continue. With developers sitting on highly leveraged balance sheets, a price cut becomes a strong possibility. Challenges to the sale scenario in the city remain high and more needs to happen to correct the stressed affordability equation amid high property prices," analysts added.