Dinesh Kamath's Editorial (Real estate position) that was published in Newsband

Real estate position

A survey was made to find the real estate position in six Metro cities: Mumbai, Delhi, Pune, Hyderabad, Bangalore and Chennai. The study covers units in Mumbai Metropolitan Region (MMR) — including Mumbai city, Thane, Kalyan and Navi Mumbai. Here are some interesting findings of the survey. 

Mumbai may be second to Delhi in unsold homes, but it will take longer to sell them. Real estate developers in the financial capital must wait over three years to clear 1.13 lakh units or 120 million sq ft as high prices deter potential buyers.

The real estate market in areas like Gurgaon or Noida attracts a lot of money from neighbouring states like Punjab, UP and Delhi as people invest in residential properties.

Pune homes will be sold the fastest, taking just 14 months to sell its 43.06 m sq ft at the current pace of buying. A steep rise in interest rates in the last 18 months was seen as the key reason for low sales as buyers try to avoid high home loan instalments.

The reason for slow sales in Mumbai is the pricing of property in the city. Pune, which is closer to the Mumbai market, sees higher sales in residential units despite having just half the units Mumbai built. High costs paid for land in Mumbai, coupled with rising construction costs, has skewed the pricing landscape which is affecting sales.

In Mumbai, demand for under-construction homes has fallen significantly. Residential absorption in Mumbai is at 33 million sq ft a year.

Bangalore with 71.29 million sq ft and Chennai 42.75 million sq ft of unsold homes will be cleared off in 20 months. But Hyderabad may take 38 months to sell 33.82 million sq ft residential units as political unrest in the city pulls down sentiment.

There is a lot of upsurge in demand for residential property in cities like Pune, Chennai, Bangalore and Hyderabad because of affordability and jobs creation.

The longer time to get government approvals and high property prices are the reasons for slow sales in Mumbai.

If the government brings down the project clearance time, it will help developers save on input and interest costs which will be eventually passed on to the consumers.

With ongoing delays in the approval process, around 16-18 million square feet of residential space is stuck every year in MMR. There are nearly 500 projects awaiting just environment clearance.

Thus these are the interesting findings of the survey.